In a recent update, the US Securities and Exchange Commission (SEC) has purportedly requested Coinbase, a prominent cryptocurrency exchange in the US, to halt trading of all digital assets except for Bitcoin. The SEC’s request preceded its initiation of legal action against Coinbase, indicating the regulator’s intention to expand its oversight to encompass a wider range of activities within the cryptocurrency market. This development has drawn significant attention and speculation within the crypto community, as it could potentially have significant ramifications for both Coinbase and the broader cryptocurrency industry in the United States.
SEC Chairman Gary Gensler has been vocal about his belief that most cryptocurrencies, except Bitcoin, should be classified as securities. However, his stance on Ethereum, the second-largest cryptocurrency, and other altcoins still needs to be clarified.
Coinbase CEO Brian Armstrong disclosed in a recent interview that the SEC had suggested delisting all cryptocurrencies except Bitcoin from their platform before filing a lawsuit against the Nasdaq-listed firm. The lawsuit was filed last month due to Coinbase’s failure to register as a broker. Armstrong mentioned that complying with this request would have set a precedent, potentially rendering the majority of American crypto businesses operating unlawfully unless they registered with the SEC.
SEC Lawsuit Sparks Uncertainty Over Classification of Cryptocurrencies on Coinbase
The SEC’s lawsuit specifically identified 13 cryptocurrencies on Coinbase’s platform as securities but needed to include Ethereum or other major tokens, creating uncertainty regarding Gensler’s position on these assets.
If the SEC gains broader oversight, it could lead to more stringent compliance standards for crypto exchanges. The need for regulatory clarity in the US crypto market poses challenges for businesses operating under the assumption that certain crypto tokens are not securities, potentially forcing them to halt their operations.
Currently, the SEC still needs to provide official commentary on the implications of a potential settlement that would involve Coinbase delisting every token except Bitcoin. This uncertainty leaves the future of the crypto industry in the US uncertain, with potential major changes having significant impacts on public offerings or retail trading of tokens.
Despite the uncertainty surrounding crypto regulations, the recent Ripple ruling injected some optimism into the cryptocurrency industry, which has been grappling with regulatory challenges.