News of the US Securities and Exchange Commission’s action against Coinbase, the number one cryptocurrency exchange in the United States, spread like wildfire in the crypto community and sparked an existential debate about what this means for cryptocurrency in the United States could mean.
“It should be clear by now that the Biden administration wants all crypto – even the legitimate parts of it – to be banned from the US.” tweeted Founder and CEO of Custodia Bank, Caitlin Long. “See also yesterday’s White House economic report which delved into all financial innovations while arguing for the ‘stability’ of traditional banks.”
Long and others questioned the SEC’s sudden delivery of a so-called “Wells Notice” after it allowed Coinbase, a public company, to offer staking rewards for several years, and only now threatened to sue Coinbase over allegations that to offer unregistered securities.
“In the last 9 months [Coinbase] met with the SEC more than 30 times and exchanged details about our business to find a way ,” wrote Paul Grewal, Chief Legal Officer at Coinbase. “During this time, the SEC has not given fundamentally zero feedback on what to change or how . Instead, we received a communication from Wells today.”
A Wells Notice is a notice from the SEC notifying a company that the agency intends to take enforcement action against it.
“Since day one, @coinbase has invested heavily in full compliance with US laws, even if it has forced them to trade more slowly or lose a competitive advantage over other exchanges that have chosen to take shortcuts.” wrote Chris Dixon, general partner at Andreessen Horowitz.
“The US has a long history of encouraging innovation, and regulators have played a key role in setting clear rules and chasing down bad actors,” Dixon continued. “We hope the US takes a more constructive approach to working with innovators while protecting consumers.”
Many have expressed solidarity with Coinbase, with Adam Cochran, founder of Cinneamhain Ventures (CEHV), saying he will “vote with my wallet” and become a customer — if Coinbase takes a stand against the agency.
While many were quick to call the SEC, some took the opportunity to criticize the firm, including many in the XRP community who were still angry that Coinbase had delisted XRP from the Coinbase wallet last fall.
Ripple Labs has been in an ongoing court battle with the SEC since December 2020, when the agency accused the company, whose founders launched XRP in June 2012, of misleading investors and raising $1.3 billion in unregistered securities.
“I doubt I’ll ever understand how the SEC can approve @coinbase’s public listing and then address all of these issues.” tweeted Attorney Bill Morgan. “Forget crypto, how is the SEC protecting Coinbase shareholders with this horrific behavior?”