Coinbase is on the brink of legal warfare with the Securities and Exchange Commission (SEC) to reach long-awaited clarity on how federal securities laws apply to the crypto industry, according to CEO Brian Armstrong.
Should the regulator situation not improve, the executive said the exchange would consider relocating away from the United States.
In an interview with CNBC on Tuesday, Armstrong called out “certain regulators” for taking a “regulation by enforcement approach” to crypto in the US – a term he’s previously used to describe the SEC’s treatment of the industry. Given this aggressive approach, he admitted that Coinbase was already assessing other countries for potentially setting up new headquarters.
“The UK is actually a very good one for us,” said the CEO. The region, he noted, is Coinbase’s second-highest revenue country, and its leaders have expressed promising interest in turning the nation into a Web3 hub.
Coinbase in particular is under fire from the SEC, which issued the firm a Wells Notice earlier this month, which is a notice warning of the intention to sue the company. It stated that Coinbase 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.
The CEO said that the SEC had never notified the exchange about what it could be doing better to remain compliant across 30+ meetings over the last year.
“I think we’re going to have to actually end up going to court to get the clarity we need and create the case law,” he said, referring to judicial precedent.
One of the SEC’s most high-profile, ongoing crypto industry lawsuits began with Ripple in December 2020, when the agency alleged that the company’s XRP token was an unregistered security. Armstrong said Coinbase is prepared for its own lawsuit with the agency to turn into a similar years-long debacle if that’s what it takes to get legal clarity.
“We never seek litigation but it seems, in this case, they have initiated it,” he added. “The law is on our side.”
On a separate front, the SEC is battling Grayscale – the world’s largest Bitcoin fund –which sued the agency last June for “arbitrarily” refusing to approve the firm’s application to launch a Bitcoin Spot ETF.
During the first oral hearing for the case in early March, court judges were skeptical of the SEC’s arguments that there was a meaningful difference between the requirements for approving Bitcoin Futures ETFs versus spot ETFs. The event caused GBTC to pump 16% on the day.
The post Coinbase is About to Go to Court With the SEC: Brian Armstrong appeared first on CryptoPotato.
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