- The SEC may have revealed its crypto stance as part of guidance to Coinbase.
- The regulator’s view puts the future of crypto in the U.S. in doubt.
- Bitcoiners may see the SEC’s stance as a boon.
The United States Securities and Exchange Commission has launched a wide array of crypto enforcement actions, ramping up efforts in recent months with lawsuits against leading exchanges.
While the agency’s enforcement strategy has largely confused industry participants, the regulator may have revealed its policy stance on crypto in a suggestion to Coinbase, the largest crypto exchange in the U.S.
Coinbase Chief Executive Officer Brian Armstrong claims that the SEC advised the firm to cease trading support for all crypto assets except Bitcoin before filing a lawsuit against the platform in June, per a Financial Times report on Monday, July 31. The claim gives insight into how broadly the regulator perceives its crypto reach and raises questions about the future of altcoins in the U.S.
Implications for Altcoins and U.S. Crypto Businesses
While SEC Chair Gary Gensler has often espoused the view that Bitcoin was the only crypto asset he considered not to be an unregistered security, the latest claim from the Coinbase chief suggests that it is now an informal agency policy stance.
The stance has potentially far-reaching effects on the crypto industry in the U.S., as many businesses like Coinbase have built businesses around trading these assets. In the case of Coinbase, the regulator had even approved its business for an initial public offering in 2021. It does not help that most crypto firms contend that there is no clear path to registering with the regulator. Consequently, many crypto firms may be forced to cease operations should the SEC’s crypto ambitions prevail.
Coinbase’s Armstrong asserted that the regulator’s suggestions had backed the exchange into a corner.
"We really didn't have a choice at that point, delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the U.S.," Armstrong reportedly asserted.
While the SEC’s stance raises doubt about the future of altcoins, it potentially serves as a boon to Bitcoiners.
Bitcoin Gets Seal of Approval, ETFs Next?
Per the SEC’s purported statement to Coinbase, the regulator maintains that Bitcoin is not a security and is not under its purview.
The revelation of this stance comes at a time when multiple institutions, including BlackRock, the world’s largest asset manager, have indicated interest in launching a spot Bitcoin exchange-traded fund.
The SEC has denied all previous applications for a spot Bitcoin ETF, but BlackRock’s application has sparked optimism that the regulator would change its stance soon. The regulator’s stance on Bitcoin further feeds into this optimism.
On the Flipside
- The SEC only named 13 crypto assets as unregistered securities in its lawsuit against Coinbase.
- Congress is working on crypto bills that could nip the SEC’s crypto ambitions in the bud.
Why This Matters
Should the SEC’s view of the classification of crypto assets prevail, retail trading of most crypto assets could become impractical in the U.S. Several firms have already shuttered operations in the U.S. or increasingly focused expansion efforts abroad in recent months.
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