Coinbase CEO Brian Armstrong spoke at length on Wednesday about his initial reaction to the Securities and Exchange Commission (SEC) lawsuit against his exchange.
The executive responded to SEC Chairman Gary Gensler’s claims that the market doesn’t need more “digital currency,” and debated the SEC’s good faith.
An avalanche of currencies
In a interview Along with CNBC’s Squawk Box, Armstrong argued that Gensler was unable to “pick and choose” tech winners in the crypto space. “Let the market decide that,” he said.
Gensler spoke to CNBC about the lawsuit on Tuesday, saying “digital currency” was already a thing before crypto. “It’s called the US dollar, it’s called the euro or it’s called the yen, they’re all digital right now,” he said.
Meanwhile, he questioned use cases for the more than 16,000 coins available for trading through Coinbase’s self-custodial wallet, arguing that disclosures were needed to clarify them. As Armstrong explained, however, the vast majority of these cryptos are only tradable on decentralized exchanges – not Coinbase’s platform.
“We reviewed over 1,000 crypto assets – we rejected over 90% of them because we felt they were not suitable for our exchange,” he said. Nevertheless, he pointed out that cryptocurrencies in addition to fiat currencies can be used for payments, remittances, political donationsand more.
SEC Tuesday deposit appointed 13 active trading on the Coinbase platform which it considers unregistered securities, some of which include Solana (SOL), Cardano (ADA) and Polygon (MATIC). Armstrong and Coinbase have long disagreed with Gensler over what constitutes “safety,” however, and argued that conflicting statements from the SEC and CFTC have created a lack of clarity about the actual rules.
“It’s not good for America, it’s not good for the industry,” he said, explaining that it would now be necessary to seek clarification from courts.
Has the SEC ‘changed its mind’ on Coinbase?
Coinbase and Armstrong previously argued that the SEC was made aware of Coinbase’s business practices in its S1 registration form. This includes its intention to offer a staking product as a service, which the SEC said in its lawsuit should have been registered with the agency before its launch.
However, CNBC panelists noted that the regulator made it clear in its listing form that its S1 approval did not amount to “approval of the legality of the issuer’s underlying business.”
To people who are pointing out that it is unfair for the SEC to take action when it approved Coinbase’s IPO, please stop. @coinbase was cautioned that approval of the registration statement does not imply approval of the underlying business activity. It’s in the complaint. pic.twitter.com/vvRYwD4pkd
— Joe Carlasare (@JoeCarlasare) June 6, 2023
While Armstrong has admitted that a regulator has the right to “go back and change their thinking,” his company does not share the agency’s legal interpretation that all crypto assets other than bitcoin are titles.
“This industry just won’t exist in the United States if you take that position,” he said.
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