Speaking to the Financial Times, Chief Executive Officer (CEO) of Coinbase, Brian Armstrong revealed that before his firm was hit with an enforcement action in June, the United States Securities and Exchange Commission (SEC) asked that it delist all tokens on its platform except leading cryptocurrency Bitcoin (BTC).
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According to Armstrong, the order was made on the premise that all tokens but BTC are securities.
“We said, well how are you coming to that conclusion? Because that’s not our interpretation of the law,” Armstrong explained. In response, the regulator said, “we’re not going to explain it to you; you need to delist every asset other than Bitcoin.”
SEC Indicts Coinbase For Unregistered Securities
After suing Binance for several charges including listing unregistered securities, the regulator indicted Coinbase for operating as an unregistered broker, exchange operator and trading unregistered securities.
Some of the tokens listed in the Coinbase lawsuit are BNB (BNB), Binance USD stablecoin (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos Hub (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS,) and Coti (COTI).
SEC Chair Classifies All Crypto But BTC as Securities
Delisting all crypto except Bitcoin would require that the American cryptocurrency exchange removes almost 250 tokens from its platform. Consequently, Armstrong believes that this would be the end of the entire crypto industry in the United States.
Markedly, at the beginning of 2023, SEC Chair Gary Gensler made a bold statement implying that all crypto but BTC are classified as securities and as such, they are under the jurisdiction of the commission.
Crypto Lawyers Argues SEC’s Jurisdiction
However, the narrative did not settle well with crypto lawyers. Logan Bolinger, an attorney, explained that Gensler’s opinion on what is or isn’t security is not “legally dispositive.” In his opinion, it is solely the right of a judge and not the SEC to decide.
Similarly, Blockchain Association’s Policy lead Jake Chervinsky clarified that the SEC’s opinion is not the law, hence, it cannot stand.
“Chair Gensler may have prejudged that every digital asset aside from bitcoin is a security, but his opinion is not the law. The SEC lacks authority to regulate any of them until and unless it proves its case in court. For each asset, every single one, individually, one at a time,” he said.
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