The world of cryptocurrency is facing yet another regulatory hurdle, as the US Securities and Exchange Commission (SEC) requested Coinbase, a prominent crypto exchange, to halt trading in all cryptocurrencies except for bitcoin.
The move, which came before the SEC’s legal action against Coinbase for failing to register as a broker, has raised concerns about the regulator’s increasing authority over the broader crypto market.
Brian Armstrong, CEO of Coinbase, revealed the SEC’s unprecedented demand during an interview with the Financial Times.
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The SEC’s case against the exchange identified 13 cryptocurrencies offered on Coinbase’s platform as securities, asserting that their availability on the platform falls under the regulator’s purview.
However, the SEC’s prior request for Coinbase to delist all but bitcoin indicates a more significant push for broader regulatory control over the crypto industry.
“They came back to us, and they said… we believe every asset other than bitcoin is a security. And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than bitcoin,” Armstrong explained
Had Coinbase acquiesced to the SEC’s request, it could have set a precedent that would have forced the majority of American crypto businesses to operate outside the law unless they registered with the commission.
In response to the SEC’s demand, Coinbase chose to challenge the regulator’s stance in court, seeking legal clarity on the matter.
Gary Gensler, the chairman of the SEC, has previously expressed his belief that most cryptocurrencies, excluding bitcoin, should be considered securities.
This recent recommendation to Coinbase indicates the SEC’s determination to enforce this interpretation in its ongoing attempts to regulate the crypto industry.
The issue of regulatory oversight in the cryptocurrency market has long been a subject of debate, with the SEC and the Commodity Futures Trading Commission (CFTC) jockeying for control.
The SEC’s move to demand Coinbase to halt trading in everything except bitcoin highlights the regulatory uncertainty surrounding the crypto space.
The implications of this legal action extend beyond Coinbase, as the SEC’s increasing assertiveness could significantly impact the crypto industry at large.
As the legal battle between Coinbase and the SEC unfolds, industry players and regulators will closely monitor the outcome, which may shape the future of cryptocurrency regulation in the United States.
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