Coinbase CEO Brian Armstrong said sees his company’s legal battle with the Securities and Exchange Commission as existential for the U.S. cryptocurrency industry after he says the regulator recommended the crypto exchange delist all tokens other than bitcoin
BTCUSD,
Armstrong told the Financial Times in a report Monday that the SEC made the request before it sued the company for operating as an unregistered securities exchange, broker and clearing agency.
“They came back to us, and they said … we believe every asset other than bitcoin is a security,” Armstrong said. “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.”
SEC Chairman Gary Gensler has said he doesn’t believe bitcoin is a security and therefore its markets are not regulated by his agency, but in a lawsuit last month, the agency listed 13 tokens it believes are being sold illegally on Coinbase
COIN,
as unregistered securities.
Armstrong told the FT that complying with the SEC’s suggestion that it delist all other tokens other than bitcoin would have been ruinous for the 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 U.S.,” he said. “It kind of made it an easy choice . . . let’s go to court and find out what the court says.”
The SEC is engaged in a multifront court battle with several entities — including Coinbase competitor Binance as well as Ripple Labs, the issuer of the XRP token — that could determine how the nation’s nearly 100-year-old securities laws pertain to the nascent digital-asset industry.
Congress is also seeking to weigh in, after the House Financial Services Committee approved two major bills regulating stablecoins and the broader crypto market structure, though those measures face long odds of becoming law.
The SEC didn’t immediately respond to a request for comment, but told the FT it didn’t make a formal request to delist certain assets.
A Coinbase spokesperson told MarketWatch in an email that the FT interview “omits important context regarding our conversations with the SEC,” and that the agency never formally requested the delisting of assets, though “the views shared in the FT article may have represented the views of some staff at the time.”
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