The US largest cryptocurrency exchange, Coinbase, has been involved in a gripping regulatory saga with the Securities and Exchange Commission (SEC). In a shocking revelation, Coinbase CEO Brian Armstrong stated that the US regulator requested that the firm delist all cryptocurrencies from their platform, except for Bitcoin (BTC).
SEC’s Call For Crypto Delisting
In an exclusive interview with a popular media outlet recently, Brian Armstrong revealed that the US SEC had pressured Coinbase to remove approximately 250 tokens from its trading platform. Armstrong further claimed that the US SEC made the demand before using the exchange.
The Coinbase CEO added that the SEC stated that, except for Bitcoin, all assets should be classified as securities. Armstrong’s revelations have led to heated debate within the cryptocurrency community, with many questioning the regulator’s enforcement approach and its perspective on digital assets.
Armstrong further said that the company was initially confused about whether to accede to the regulator’s demands or maintain the listing of the tokens on its trading platform.
Furthermore, the Coinbase CEO claimed that he recorded his conversations with the commission. In one of the conversations, the SEC officials told him that the regulator wouldn’t explain why the exchange should delist all tokens except Bitcoin.
Armstrong’s viewpoint is corroborated by an interview SEC Chair Gary Gensler granted earlier this year. During the interview, Gensler stated that the classification of digital assets as commodities or securities is still within the authority of the SEC.
The distinction between securities and commodities has emerged as a critical point of contention in the crypto space since it has implications for crypto market participants. However, Armstrong stated that agreeing with the regulator’s demand would have been an enormous setback for the US crypto space development compared to other top economies.
SEC’s Lawsuit Against Coinbase
Earlier in June 2023, the securities watchdog filed a lawsuit against Coinbase, accusing the leading cryptocurrency exchange didn’t have the necessary license to operate as a virtual asset service provider.
However, Coinbase was not the only company facing SEC legal action. The regulatory body filed a similar complaint against Binance, another prominent player in the cryptocurrency exchange sphere, days before filing a lawsuit against Coinbase.
Meanwhile, a report by the Financial Times stated that the SEC denied issuing such a demand to Coinbase. According to the report, the SEC noted that its enforcement division does not issue formal requests to delist crypto assets.
But their staff members may share expert opinions on potential securities law violations. Meanwhile, the US Commodity Futures Trading Commission (CFTC) and the SEC are still at loggerheads over who should perform oversight functions over the crypto sector.
Hence, both regulators take regulatory actions against crypto players as they deem fit. However, the dispute regarding oversight functions for the crypto industry between the US SEC and CFTC may soon be over following a recently introduced bill seeking to delegate crypto jurisdiction primarily to the CFTC while clarifying the SEC’s role in crypto regulation.
The House Financial Services Committee approved the bill and passed the House Agricultural Committee on July 27.