In a recent interview, Brian Armstrong, CEO of Coinbase, commented on the firm’s ongoing war with the United States Securities and Exchange Commission (SEC). He has called out the regulator for their antagonistic approach to the crypto industry.
On Tuesday, Armstrong said that Coinbase is on the edge of legal warfare with the regulator to attain the long-awaited clarity on how federal securities laws apply to the crypto industry.
I think we’re going to have to end up going to court to get the clarity we need and create the case law.
He added that if the regulatory situation does not improve in the United States, the exchange would consider relocating away from the country. Armstrong confirmed that Coinbase was already assessing other countries for potentially setting up new headquarters as he called out “certain regulators.” He criticized regulators for taking a “regulation by enforcement approach” to crypto in the US. He has been using the term to describe the SEC’s treatment of the industry.
Notably, among other options, Coinbase is favorably looking up the United Kingdom. The CEO highlighted the UK as the second-highest revenue country, and its leaders have expressed promising interest in turning the nation into a Web3 hub.
On 23rd March, the SEC sent a Wells Notice to Coinbase informing it about possible enforcement action. The regulator stated that the firm had violated federal securities laws, which Armstrong suspects are related to the assets listed on the exchange, as well as its staking as a service product.
After that, the CEO said that despite being asked, the SEC never notified or informed the exchange about necessary changes to be made to remain compliant across 30+ meetings over the last year. Hence, the firm is prepared for its lawsuit with the agency to turn into a similar years-long debacle if that’s what it takes to get legal clarity. As Armstrong stated:
We never seek litigation but it seems, in this case, they have initiated it. The law is on our side.
As soon as Coinbase took to Twitter to confirm the news of the notice, the executives stated their willingness to be involved in legal procedures if required. Notably, the head of the European division of the firm had already hinted towards the recent probability of a shift of base.
Recently, the SEC has been on an enforcement spree and has been targeting numerous crypto firms. Before Coinbase, the regulator had fined Kraken and sent another Wells Notice to Paxos targeting BUSD, the third-largest stablecoin. The SEC accused Paxos of selling unregistered security but the firm categorically disagreed with the regulator.
Several lawmakers had already flagged concerns regarding the regulator’s behavior. French Hill, a Republican lawmaker, had said that the regulators and their crackdown on crypto entities will be responsible for driving innovation away.