CEO Brian Armstrong told Financial Times that the SEC approached them stating that they consider every cryptocurrency or digital asset, except for Bitcoin, to be a security.
“They came back to us, and they said . . . we believe every asset other than bitcoin is a security,” he said.
Armstrong challenged the SEC’s perspective, asserting that they held a divergent interpretation of the laws governing the classification of crypto assets.
“And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than bitcoin,” he continued.
According to Armstrong, the choice to resist the SEC’s request was straightforward. He clarified that complying with the SEC’s demands would have resulted in severe repercussions for the entire cryptocurrency industry in the United States.
“We really didn’t have a choice at that point, delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US.”
“It kind of made it an easy choice . . . let’s go to court and find out what the court says.”
The request came just before the regulatory watchdog filed charges against the exchange for violating securities law. In its filing, the SEC accused Coinbase of being an unregistered broker, exchange, and clearing agency despite providing access to crypto asset securities. It is also claimed that Coinbase operated two additional services, Coinbase Prime and Coinbase Wallet, as unregistered brokers. The SEC further labeled about 13 cryptocurrencies including Solana (SOL), Cardano (ADA) and Polygon (MATIC) traded on Coinbase as securities.
Even though the regulator has intensified its efforts against Coinbase and other entities in the cryptocurrency industry, these exchanges and other parties facing similar legal actions have received a significant boost in confidence. This positive outlook is attributed to Ripple’s recent legal victory against the SEC.
SEC’s request mirrors Michael Saylor’s views
Last month, Microstrategy co-founder and long-term bitcoin maxi Michael Saylor told Bloomberg in an interview that the industry was tilting to a Bitcoin-focused one.
“It’s pretty clear that the regulators don’t see a legitimate path forward for cryptocurrencies..I think they have a view of cryptocurrency exchanges which is far constrained. I mean their view is crypto exchanges should trade and hold pure digital commodities like Bitcoin and so the entire industry is kind of destined to be rationalised down to a Bitcoin-focused industry with maybe half a dozen to a dozen other proof-of-work tokens,” he said