The US Securities and Exchange Commission has ordered popular cryptocurrency platform Coinbase (NASDAQ:COIN) to cease trading in all cryptocurrencies, except for bitcoin, before launching the company's legal process, signaling the agency's intent to assert regulatory authority over a broader segment of the market. .
Coinbase CEO Brian Armstrong told the Financial Times that the SEC made the recommendation before launching a lawsuit against the Nasdaq-listed company last month for failing to register as a cryptocurrency broker.
The SEC case has identified 13 digital currencies that are mostly lightly traded on Coinbase as securities, asserting that by offering them to clients, the exchange falls under the jurisdiction of the regulator.
But Coinbase's previous request to delist every one of the more than 200 tokens it offers — with the exception of the flagship bitcoin — indicates that the SEC, under chairman Gary Gensler, has pushed for expanding its powers over the crypto industry.
If Coinbase agreed, it would have set a precedent that would have left the vast majority of US crypto companies operating outside the law unless they registered with the commission.
The end of the crypto industry
We really had no choice at that point, said Armstrong. Delisting every asset other than bitcoin, which by the way is not what the law says, would have basically meant the end of the crypto industry in the United States.
Oversight of the digital currency industry has so far been in a gray area, with the Securities and Exchange Commission and the Commodity Futures Trading Commission vying for control.
The CFTC sued the largest crypto exchange, Binance, in March of this year, three months before the SEC launched its legal action against the company.
Gensler has previously said that he believes that most cryptocurrencies apart from Bitcoin are securities. However, the recommendation to Coinbase notes that the SEC has adopted this interpretation in its attempts to regulate the industry.
Stocks, bonds, and other traditional financial instruments fall under the jurisdiction of the Securities and Exchange Commission, but US authorities are still stuck debating whether all — or any — crypto tokens should fall under their jurisdiction.
