Coinbase CEO Brian Armstrong is not shaken by the U.S. Securities and Exchange Commission (SEC)’s new lawsuit against his exchange.
Both the executive and his company responded with brief arguments on Monday as to why Coinbase will reign victorious in its legal battle with the regulator.
A Chance to Win Clarity
In a tweet on Tuesday, Armstrong said that Coinbase would be “proud” to represent the crypto industry in its SEC court battle, and to “to finally get some clarity around crypto rules.”
Armstrong has blasted the SEC for years for failing to clarify how securities laws apply to the crypto industry, such as which digital assets qualify as securities, and which as commodities. The exchange sued the SEC in April for failing to reply to Coinbase’s petition to provide rules for digitally traded securities, but the regulator claimed that crypto already had clear rules and regulations governing it.
One of the SEC’s core allegations is that Coinbase has failed to register with the agency for various securities products it provides. Armstrong, however, argued that there is no reasonable path forward to do so.
“We tried, repeatedly – so we don’t list securities,” he said. Furthermore, the SEC and CFTC have provided conflicting statements about which crypto assets qualify as securities – including Ethereum (ETH) and Tether (USDT).
US Congress is already attempting to introduce crypto-specific legislation to remedy the situation, but that still leaves the nation behind “the rest of the world” when it comes to industry rulemaking.
“We’ll get the job done,” he said. “In the meantime, let’s all keep moving forward and building as an industry. America will get this right in the end.”
The Numbers
In a video published by Coinbase on Tuesday, the exchange provided stats to prove its commitment to regulatory compliance, and the SEC’s failure to cooperate.
The exchange noted that it mentioned its “staking” 57 times within its S1 report, which the SEC chose to approve. It also met privately with the SEC 30 times seeking guidance on how to stay legally compliant.
Meanwhile, the SEC has established 0 comprehensive rules pertaining to crypto, and uses a test written in 1946 to determine if tokens are securities (the Howey Test).
Critics of Coinbase pointed out, however, that the SEC made clear in its approval of the exchange’s S1 that it did not necessarily approve the legality of Coinbase’s underlying business.
To the folks posting that it’s unfair that the SEC is filing an action when they approved the coinbase IPO, please stop. @coinbase was warned that approval of the registration statement didn’t mean approval of the underlying business activity. It’s in the complaint. pic.twitter.com/vvRYwD4pkd
— Joe Carlasare (@JoeCarlasare) June 6, 2023
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