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thisCrowd - Audio Read
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Coinbase, the Nasdaq-listed cryptocurrency exchange, faced a significant challenge from the US Securities and Exchange Commission (SEC) before being sued for failure to register as a broker. In a bold move, the SEC urged Coinbase to halt trading in all cryptocurrencies except for bitcoin, indicating its desire to exert regulatory authority over a broader segment of the market. This action came as the agency’s chairman, Gary Gensler, sought wider control over the crypto industry.
According to Coinbase CEO Brian Armstrong, the SEC identified 13 cryptocurrencies on their platform as securities, claiming that offering these tokens to customers brought them under the regulator’s purview. Moreover, the SEC requested Coinbase to delist more than 200 tokens, leaving only bitcoin available for trading. Armstrong highlighted that complying with this request would have spelled the end of the crypto industry in the US, as most American crypto businesses would have operated outside the law unless they registered with the commission.
Faced with an impossible choice, Coinbase decided to challenge the SEC’s stance in court. Armstrong expressed the need to seek legal clarification, as the law did not align with the SEC’s interpretation. He believed that going to court was the only way to determine the legitimacy of the SEC’s demands and the future of the crypto industry in the country.
The oversight of the crypto industry has been a contentious issue, with both the SEC and the Commodity Futures Trading Commission (CFTC) vying for control. The CFTC had already sued Binance, the largest crypto exchange, a few months before the SEC took action against them. Gensler, the SEC’s chairman, had previously indicated his view that most cryptocurrencies, except for bitcoin, were securities. Now, with the SEC’s move against Coinbase, it appears the commission is enforcing this interpretation to regulate the industry.
Interestingly, the SEC’s case against Coinbase excluded Ether, the second-largest cryptocurrency, from its list of “crypto asset securities.” Ether is a crucial component in numerous industry projects, raising questions about the SEC’s criteria for determining which tokens fall under its purview.
The debate surrounding crypto tokens’ classification continues, as traditional financial instruments like stocks and bonds fall under the SEC’s jurisdiction. Bringing cryptocurrencies under SEC oversight would introduce more stringent compliance standards, potentially disrupting the operations of many American companies that had assumed their tokens were not securities.
In conclusion, the clash between Coinbase and the SEC reflects the broader uncertainty and regulatory challenges facing the crypto industry in the US. The outcome of this legal battle will likely shape the future landscape of digital assets and their regulation in the country.
