Coinbase CEO Brian Armstrong voiced frustration over the charges. He mentioned how his company has provided a lot of clarity to the SEC but the commission on the other hand is not making matters easier.
Despite over 30 meetings with the SEC in the past 18 months aimed at gaining regulatory clarity, cryptocurrency exchange Coinbase was hit with charges in June for operating an unregistered securities exchange. This came after the company received a Wells Notice for potentially breaking securities law from the regulator in March, signaling an intention to bring legal action against the crypto company.
In a Decrypt interview, Coinbase CEO Brian Armstrong voiced frustration over the charges. He mentioned how his company has provided a lot of clarity to the SEC and has made a lot of efforts to defend its stance while the commission on the other hand is not making matters easier. He said his crypto exchange presented extensive legal rationale and continuously sought guidance on which crypto assets the SEC considers securities, and so far they have only received confirmation on Bitcoin (BTC).
The SEC alleges that tokens such as Solana, Cardano, and some others listed on Coinbase qualify as securities under criteria for “investment contracts,” requiring proper registration. But Coinbase disputes this interpretation, arguing the assets do not constitute securities. This has opened up a lot of issues around how they should be classified. The parties have also appeared in court at different times to explain and defend their stances.
Coinbase vs SEC: Regulatory Turf War Creating Compliance Hurdles
Behind the tensions lies what Armstrong calls an ongoing “turf war” between the SEC and Commodity Futures Trading Commission (CFTC) around which commission should have proper oversight over cryptocurrency companies and services. This has brought more confusion around cryptocurrency regulations, as there have been more enforcements rather than better clarity on what exchanges should do.
According to Armstrong, the United Kingdom (UK) is far more friendly and has clearer regulations than the United States, and this can also be attributed to crypto regulations being led by a single watchdog, the Financial Conduct Authority. Prime Minister Rishi Sunak is also very welcoming towards cryptocurrencies, making it easier for Coinbase and other crypto exchanges to operate in the country. The founder said his company has already created jobs in the UK and also intends to establish further investments.
Some US lawmakers dispute the notion of a turf war between regulators. Rather, they see it as helping to maintain sanity within the industry as some crypto firms fail to comply properly with regulations. They believe the regulators help to ensure proper compliance with all the rules.
Seeking Legal Recourse while Pushing Congress
The issue of regulatory clarity in the crypto industry has been ongoing for a long time and with the industry being very young, with its solutions similar but still different from its traditional counterparts, regulators and various interpreters still do not agree on what should remain a security and what should not, especially in the United States. This has led many crypto exchanges into trouble.
To confront this regulatory issue, Armstrong mentioned the possibility of a judicial appeal to resolve issues that pertain to differing interpretations. He also expressed optimism for impending Congressional legislation that could ease crypto oversight burdens.