On Monday, July 31, the second largest crypto exchange by daily trading volume, Coinbase, revealed that the US Securities and Exchange Commission (SEC) had requested the firm only to support the listing of Bitcoin. In an interview with the Financial Times, the chief executive of Coinbase, Brian Armstrong, stated that the SEC urged the crypto exchange to delist other crypto assets except Bitcoin.
At that time, the crypto exchange had listed 250 crypto assets on its trading platform. Upon reaching on SEC to clarify why the crypto asset should be delisted, the SEC claimed that most of the tokens were securities. The market regulators told Armstrong that most of the crypto assets listed on Coinbase were considered as security apart from Bitcoin.
SEC Push for Delisting of Tokens
In response to the SEC claims, the Coinbase team demanded the regulators to provide a provision in the US law that considers Bitcoin not a security. The executive lamented that the SEC failed to provide further information concerning the delisting of the digital tokens.
In an earlier interview with the New York Magazine, SEC chair Gary Gensler stated that all other crypto assets except Bitcoin were securities. Gensler claimed that the SEC considers most crypto projects as securities except Bitcoin-oriented projects. He explained that in most projects, there is a group where the crypto enthusiast expects profits in return.
Gensler’s statement faced criticism from the crypto lawyers. In a statement, Jake Chervinsky, a lawyer at Blockchain Association, confessed that Gensler’s opinion was not in line with the law. In his argument, Chervinsky stated that Gensler comment will only be implemented unless the SEC defends the new provision in a court of law.
Chervinsky response to Gensler’s claims mirrors Coinbase reaction to proposed delisting of tokens. The CEO admitted that Coinbase was reluctant to honor SEC requests. He decried that the SEC’s opinion on crypto assets could lead to the end of the digital industry in the US.
Even though the SEC has legal authority over the crypto sector, Armstrong requested the regulators to present the matter in court.
Coinbase Faces Charges
Months after failing to comply with SEC request, Coinbase was caught on the wrong side of the law by the market regulators. In June, Coinbase was accused by the SEC of operating as an unregistered crypto exchange.
The SEC claimed that Coinbase offered 13 tokens which were unregistered securities. The SEC stated that Cardano (ADA), Solana (SOL), Polygon (MATIC), and Sandbox (SAND) offered by Coinbase violated the securities laws.
The SEC lawsuit against Coinbase came when Binance faced similar charges of violating securities law.
In the wide-ranging interview with the Financial Times, the SEC confessed that its enforcement approach does not require the regulators to make formal requests on the delisting of digital assets.
However, the Coinbase team confirmed to hold talks with the SEC to support compliance. The regulators anticipate that the engagement with the SEC will support transparency and a fair rulemaking process to support the growth of the crypto industry.
Additonally, SEC officials are mandated to share their opinion on actions by crypto firms that violate the securities requirements. Besides the SEC, the market regulators recognize that the Commodity Futures Trading Commission has the legal power to supervise crypto activities.
