Coinbase faced a critical situation when the U.S. Securities and Exchange Commission (SEC) instructed them to delist all cryptocurrencies on their platform, except for Bitcoin.
The revelation comes from Coinbase CEO Brian Armstrong, who disclosed the regulatory pressure in a recent interview.
The SEC’s stance on considering most assets as securities, excluding Bitcoin, has raised significant concerns within the crypto industry.
In a July 31 interview with the Financial Times, Brian Armstrong disclosed the SEC’s surprising demand to delist nearly 250 tokens listed on the Coinbase platform.
The SEC, believing that “every asset other than Bitcoin is a security,” reportedly insisted on the delisting action before initiating a lawsuit against the exchange.
Coinbase’s CEO, Brian Armstrong, and his team vehemently disagreed with the SEC’s interpretation of the law. The regulator did not provide an explanation for its stance, simply stating that all assets other than Bitcoin should be removed from the exchange.
Had Coinbase complied, it could have set a concerning precedent and potentially jeopardized the future of the entire crypto industry in the United States.
SEC Chair Gary Gensler shares a similar view, stating in a February New York Magazine interview that “everything other than Bitcoin” is considered a security under the agency’s purview. This view indicates a stricter regulatory approach towards cryptocurrencies other than Bitcoin.
The SEC initiated legal action against Coinbase in early June, accusing the exchange of operating as an unregistered exchange.
The regulator identified 13 cryptocurrencies offered by Coinbase as unregistered securities. The regulatory crackdown extended beyond Coinbase, as the SEC also filed a similar complaint against Binance, another major cryptocurrency exchange.
The U.S. crypto industry faces uncertainty due to the lack of a singular regulator overseeing cryptocurrencies. Both the SEC and the Commodity Futures Trading Commission (CFTC) have taken regulatory actions against players in the crypto industry.
However, recent legislative developments show progress in clarifying regulatory roles. Legislation that primarily grants crypto jurisdiction to the CFTC while defining the SEC’s role in the crypto industry has passed the House Agricultural Committee and the House Financial Services Committee.