Amid the ongoing regulatory struggles, Coinbase CEO has again taken a shot at the United States Securities and Exchange Commission (SEC) and the need for clarity in crypto regulations. The CEO called on the lawmakers to engage with the regulations and a similar voice came from a Republican lawmaker.
In a recent interview, Brian Armstrong, CEO of Coinbase, said the U.S. crypto industry needs regulatory clarity, which can only come from Congress or through case law. He explained there’s an ongoing power struggle between the two primary regulators – the SEC and the Commodity Futures Trading Commission (CFTC) and Coinbase has been “caught in the middle” of this turf war between the agencies.
As evident, Armstrong outlined that both the regulators have contradicted each other’s theories in the past putting the larger industry into confusion and doubt. He included the example that the CFTC has claimed certain assets like Ethereum to be commodities while the SEC has called them securities. Further, he implied:
Since the two agencies have not been able to come to an agreement on the status of cryptocurrencies as securities or commodities, we need clarity and for this clarity, Congress has to step in and frame legislation.
Coinbase has shown optimism and courage in the wake of the recent lawsuit and the CEO in the interview said that any clarity from the courts, irrespective of the outcome, will be a “step in the right direction.” He added that he is confident that even if it takes a few years, the U.S. will ultimately reach the “right outcome.” This “right outcome” could come from the courts, through Congress legislation, or after the 2024 presidential elections.
Additionally, Armstrong said that until we have legislation, the industry will depend on case laws that will emerge out of lawsuits like the one filed by the SEC against Coinbase last week. On Tuesday, the SEC filed charges against Coinbase claiming it to be selling unregistered securities.
The SEC has listed 13 assets as securities which were being sold by Coinbase but Armstrong rejected their classification. He added that Coinbase’s asset listing process involves “rigorous analysis,” and there’s a “stack of paper” for every asset listed on the exchange, and he “feels” that the tokens listed on Coinbase are commodities and not securities.
Further, he reiterated what the firm has already said that the SEC never engaged with Coinbase on requests for clarity and supervision. He also said that Coinbase shared its framework for differentiating between crypto securities and commodities with the SEC before it went public. However, the SEC’s silence forced the exchange to rely on its own listing committee, which is made up of the “best legal minds in the world.”
While Armstrong highlighted the need for clarity, simultaneously US Senator Cynthia Lummis (Republican-Wyoming) has said she is working on “a regulatory framework that will allow individuals and companies to own and trade digital assets in America.” In a tweet, the Republican lawmaker announced her initiative to ensure fairness to the crypto industry.
Lummis along with Democratic Senator Kirsten Gillibrand had previously worked on the bipartisan bill but unfortunately it appears to have stalled in a wave of post-FTX crisis apprehension and Washington procrastination. But the current market volatility and the very real threat of a mass exodus of businesses could be just what is needed to breathe new life into their efforts.
The SEC’s recent lawsuit comes months after the Wells Notice it sent to the exchange. Upon receiving the notice, the exchange had retaliated with a narrow legal action. Upon Coinbase’s petition, the US Court of Appeals for the Third Circuit responded to the complaint against the SEC regarding the need for clear rules for trading digital assets. However, despite this the SEC chief stayed firm on his stance and denied the exchange’s request saying it has no right to request clarity.