The US Securities and Exchange Commission (SEC) has reportedly asked Coinbase, America’s largest crypto exchange, to halt trading in all cryptocurrencies other than flagship token Bitcoin.
Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Unlike traditional currencies like the US Dollar or Euro, cryptocurrencies are decentralized, meaning they’re not issued or controlled by a central authority such as a government or financial institution.
Instead, they are governed by technology called blockchain, which is a distributed ledger enforced by a network of computers around the world, according to Investopedia.
The revelation was made by Coinbase CEO Brian Armstrong, during an interview with the Financial Times.
Armstrong explained that the request came before the SEC’s legal action against Coinbase for its alleged failure to register as a broker.
The regulatory body has identified 13 cryptocurrencies traded on Coinbase’s platform as securities, arguing that the platform falls under its jurisdiction by offering these tokens to its customers.
However, the SEC’s prior recommendation to Coinbase to delist all tokens except Bitcoin, out of the more than 200 tokens offered on the platform, signals a significant push by the SEC, under chair Gary Gensler, to claim more authority over the crypto industry, according to FT.
“They came back to us, and they said . . . we believe every asset other than bitcoin is a security,” Armstrong told FT.
“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 added.
The CEO indicated that complying to such a request could have set a precedent that might have jeopardized the operations of most American crypto businesses unless they registered with the SEC.
In his view, it would have meant the end of the US crypto industry.
“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,” said Armstrong.
“It kind of made it an easy choice . . . let’s go to court and find out what the court says,” he added.
On Monday, a representative for the SEC responded to FT, stating that the agency “does not ask companies to delist crypto assets.”
“In the course of an investigation, the staff may share its own view as to what conduct may raise questions for the Commission under the securities laws,” the spokesperson said.
While the Coinbase representative did not contradict Armstrong’s claims, they did say the FT report “omits important context regarding our conversations with the SEC.”
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