Regulatory Chaos Unleashed: SEC Accused of Forcing Crypto Giant to Halt Trading

Armstrong disclosed these allegations in a recent interview with the Financial Times.

by Faruk Imamovic
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Regulatory Chaos Unleashed: SEC Accused of Forcing Crypto Giant to Halt Trading

In an intriguing twist to the unfolding narrative of cryptocurrency regulation in the United States, Brian Armstrong, the chief executive of Coinbase, one of the world's largest cryptocurrency exchanges, has accused the Securities and Exchange Commission (SEC) of instructing the company to cease trading all cryptocurrencies except Bitcoin.

Armstrong disclosed these allegations in a recent interview with the Financial Times.

Tensions Amid Regulatory Ambiguity

Armstrong has stated that Coinbase faced a stern directive from the SEC. "We really didn’t have a choice at that point,” he said, conveying the sense of pressure his company was under.

According to Armstrong, the lack of clarity over how the SEC determines whether a digital asset is a security led to considerable tensions, leading up to the eventual lawsuit in June. The CEO vividly recounted a conversation with the regulator where Coinbase had sought clarity on this issue. “And they said, we’re not going to explain it to you, you need to delist every asset other than Bitcoin,” Armstrong told the Financial Times.

However, an SEC spokesperson countered these allegations, stating, “the staff does not ask companies to delist crypto assets”. The spokesperson went on to explain that, during investigations, the staff may share their views on what conduct might invite scrutiny under securities laws.

Discrepancies in Interpretation

While Coinbase did not refute the essence of Armstrong's statements, a spokesperson claimed that the Financial Times article "omits important context regarding our conversations with the SEC”.

According to the spokesperson, the perspectives shared in the article may have reflected the views of some SEC staff at the time, but they did not necessarily represent the broader stance of the Commission. “We continue our discussions with the Commission," the spokesperson added, emphasizing their commitment to maintaining an open dialogue.

Coinbase holds that the best path forward for American crypto users and the companies propelling the US cryptoeconomy is one of "transparent and fair rulemaking and Congressional action”.

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