Coinbase, one of the world’s leading cryptocurrency exchanges, recently revealed the US Securities and Exchange Commission’s (SEC) intentions to exert greater regulatory control over the crypto market. The SEC allegedly urged Coinbase to suspend trading in all cryptocurrencies except Bitcoin, which is the only crypto that’s not considered by the regulator as security. If agreed upon, could have spelled the potential collapse of the crypto industry in the United States. This revelation has sent ripples through the crypto community, raising questions about the future of cryptocurrencies beyond Bitcoin and the extent of regulatory oversight.
The SEC’s Request and Implications
Coinbase CEO Brian Armstrong disclosed in a recent interview with the Financial Times (FT) that the SEC suggested delisting all cryptocurrencies other than Bitcoin before initiating legal action against the exchange for allegedly failing to register as a broker. The regulatory body identified 13 lesser-known cryptocurrencies on the platform as securities, asserting its jurisdiction over them.
The proposal to halt trading of over 200 tokens, except for Bitcoin, has signaled the SEC’s attempt to broaden its authority over the crypto industry.
Legal Battle and Regulatory Clarity
Coinbase’s decision to contest the SEC’s request in court is likely to lead to a protracted legal battle. However, this presents an opportunity for regulatory clarity.
A court ruling on whether certain cryptocurrencies are securities or not could set a precedent for the entire crypto market, enabling businesses to understand and comply with the regulatory landscape better.
Impact on Crypto Businesses
If the court were to rule in favor of the SEC, requiring delisting of most tokens other than Bitcoin, it could have serious repercussions for numerous American crypto businesses. Companies that have built their models around the assumption that these tokens are not securities may face the possibility of shutting down operations or significantly restructuring their business practices. Either way, this may affect their valuation and public sentiment towards them.
Ether’s Exclusion and Uncertain Future
Meanwhile, the second-largest cryptocurrency, Ether, was absent from the SEC’s case against Coinbase. This raises questions about the regulatory status of other cryptocurrencies beyond Bitcoin and those listed in the lawsuit against Binance.
The uncertainty surrounding Ether and other prominent tokens could create a sense of unease among investors and businesses in the crypto community.
Stricter Compliance Standards
Should the SEC gain more control over the crypto industry, businesses would likely face more stringent compliance standards. Crypto exchanges, which often provide custody services and engage in various practices, might find it challenging to align their operations with SEC regulations.
This could potentially lead to a shift in the crypto landscape, with some exchanges choosing to become SEC-regulated while others might prefer alternative jurisdictions.
The revelation of the SEC’s stance on Bitcoin and other cryptocurrencies by Coinbase has ignited a debate within the crypto community about the future of the industry. The potential scenarios that may arise from this revelation range from a legal battle to regulatory clarity, impacting the operations of various crypto businesses.
On the other hand, the exclusion of Ether from the SEC’s case adds to the uncertainty surrounding the regulatory status of different tokens. As the situation unfolds, the crypto community eagerly awaits the court’s decision, which could shape the landscape of the industry for years to come.
After writing this article, Coinbase has reportedly called out FT for its alleged “inaccurate representation of the facts” with regard to this subject. The related report can now be found here.
Giancarlo is an economist by profession with a career spanning nearly two decades. His professional journey has seen him assume vital roles in various government and private organizations such as the Department of the Interior and Local Government (DILG), the National Economic and Development Authority (NEDA), Megaworld Corporation, and the China Banking Corporation in the Republic of the Philippines.
In addition to his civic and corporate pursuits, his forward-thinking approach has led him to manage several prominent websites in the banking and finance sector, notably the Australia-based RateChoice, where he immersed himself in the world of emerging financial technologies and where he found particular interest in Bitcoin all the way back to 2013.
Prior to his addition to Blockzeit’s dynamic team, he held an essential role as Project Manager for initiatives encompassing blockchain, stablecoin, mining, special economic zone development, and iGaming. This noteworthy chapter in his career unfolded under the auspices of InPlan Consultancy Services, Inc., the think-tank of IMPERO Consortium Management Corporation headquartered in Manila, Philippines, and Tokyo, Japan. InPlan, led by a distinguished retired Cabinet member of the Philippines, collaborates directly with IMPERO’s core management team, contributing to strategic planning and business development endeavors.