A month ago, the U.S. Securities and Exchange Commission (SEC) sent a warning letter to Coinbase, one of the world’s largest centralized cryptocurrency exchanges based in America. Tensions arose between the two sides after that letter.
On Thursday, Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal addressed the issue in a video message on their YouTube channel, discussing the “Wells Notice” received from the SEC.
Coinbase also shared a letter they sent to the SEC in response to the Wells Notice on the same day. In the letter, Coinbase states that the SEC staff contends that the company has been operating illegally since at least 2018. However, Coinbase argues that the staff’s legal theories are “flawed and untested.”
Brian Armstrong started the video by explaining the founding story of Coinbase. ”Crypto is an important technology to update the global financial system” according to him.
Armstrong’s initial intention was to establish Coinbase within the United States, but he revealed that doing so proved to be more challenging than anticipated. In his video message, he went on to explain the reasons behind these difficulties.
”Really wasn’t clear what we should do because it was a new industry. We tried to do the right thing in the absence of clarity but the goal was to be safe and thoughtful in the absence of regulatory clarity.”Brian Armstrong, the CEO of Coinbase.
He continued by saying that he wanted to leave a message to the commission members and SEC: ”We are committed to working within the regulator perimeter. We want to see a clear market structure for trading crypto securities. We are going to work with multiple regulators to make this industry more reliable.”
Armstrong expressed his concerns regarding the “Wells Notice,” stating that it is unclear and not beneficial for the United States at this stage. He emphasized that Coinbase is prepared to defend its position in court, though he hopes it doesn’t come to that. Armstrong also highlighted the company’s readiness to maintain open communication and collaborate in finding a proper and workable path for the entire industry.
“We are prepared to defend that position in court. But it doesn’t have to come to that. We welcome a true dialogue about a workable path forward for our industry.”Brian Armstrong.
After discussing his concerns, Armstrong handed the conversation over to Paul Grewal. Grewal began by mentioning that they had previously sent letters to the SEC, requesting a regulatory framework to guide their operations. However, he added that they had not received any response from the SEC.
”I want to be very direct with you. Coinbase does not list Securities. We use a robust process based on SEC guidance to make sure that we don’t list securities. We reject some %90 of the assets that we review.”Paul Grewal, the Chief Legal Officer of Coinbase.
Both Armstrong and Grewal believe that litigation is unnecessary and would ultimately be detrimental to investors. They emphasize their willingness to engage in rulemaking and express a desire to collaborate with the SEC to protect the best interests of investors in the cryptocurrency industry.
In conclusion, Coinbase’s leadership is taking a proactive approach in addressing the SEC’s Wells Notice, emphasizing the importance of collaboration and open dialogue over litigation. As the cryptocurrency industry continues to evolve, it is crucial for regulators and businesses like Coinbase to work together, establishing clear guidelines that promote innovation while protecting investors’ interests.