The US Securities and Exchange Commission (SEC) Asks Coinbase to Halt Trading in All Cryptocurrencies Besides Bitcoin
The world of cryptocurrency is facing another challenge as the US Securities and Exchange Commission (SEC) has reportedly asked Coinbase, a prominent cryptocurrency exchange, to cease trading in all cryptocurrencies except Bitcoin. This request was made before the SEC launched a legal attack against the exchange. In this article, we will explore the details of this development and its potential implications for the crypto industry in the United States.
The SEC’s Request and Legal Action
In an interview with the Financial Times, Brian Armstrong, the CEO of Coinbase, disclosed that the SEC demanded the exchange to halt trading of all cryptocurrencies except Bitcoin. The reason behind this request was the SEC’s contention that the vast majority of cryptocurrencies, with the exception of Bitcoin, should be classified as securities. As such, Coinbase was accused of failing to register as a broker for offering these tokens on its platform.
The Impact on Coinbase and the Crypto Industry
Coinbase, being one of the largest cryptocurrency exchanges in the US, faced a significant challenge when the SEC asked them to delist more than 200 tokens from their platform. Compliance with this demand could have jeopardized the existence of numerous American crypto businesses, compelling them to register with the commission or operate outside the legal boundaries.
Gensler’s Stance on Cryptocurrencies
Gary Gensler, the Chair of the SEC, has previously expressed the opinion that the majority of cryptocurrencies should be considered securities, with Bitcoin being the notable exception. Notably, Ethereum, the second-largest cryptocurrency that plays a pivotal role in numerous industry projects, was conspicuously absent from the SEC’s case against Coinbase. Ethereum was also not listed among the “crypto asset securities” in the lawsuit filed against Binance.
Coinbase’s Response
In response to the SEC’s request, Armstrong explained that Coinbase felt it had no choice but to comply. He argued that delisting all assets except Bitcoin would not align with the law and could have effectively led to the end of the crypto industry in the United States. This move has highlighted the ongoing tension between the crypto community and regulatory bodies like the SEC.
The Ambitious Regulatory Agenda
The SEC’s move to request Coinbase to halt trading in most cryptocurrencies suggests a potentially broader regulatory ambition under Gary Gensler’s leadership. The commission’s intention to classify a vast array of cryptocurrencies as securities indicates a heightened level of scrutiny and oversight in the crypto space.
Ethereum’s Exemption
It is noteworthy that the SEC’s legal action against Coinbase did not include Ethereum, despite Gensler’s view on most cryptocurrencies being securities. This exclusion has raised questions among industry observers about the SEC’s approach to individual cryptocurrencies and the criteria for classification.
The SEC’s Approach to Crypto Delistings
While the SEC denied making formal requests for companies to delist specific cryptocurrencies, it acknowledged that its staff might share views on what conduct could raise questions under securities laws during an investigation. This indicates a degree of informality in the process of determining which tokens should be classified as securities.
