SEC Asked Coinbase to Nix Most Crypto Offerings Before Lawsuit

The US Securities and Exchange Commission (SEC) attempted to expand its regulatory reach by asking Coinbase to suspend trading in all cryptos except Bitcoin, reported the Financial Times. It is alleged that the request was made before the agency sued the exchange.

Brian Armstrong, the CEO of Nasdaq-listed Coinbase, revealed to the paper that the SEC recommended delisting over 200 tokens.

Inside Details of Coinbase SEC Battle Revealed

In the lawsuit, the SEC alleged Coinbase traded at least 13 crypto assets that could be dubbed securities. However, the initial recommendation of the agency reportedly included 200 tokens.

A request that would bring most of the cryptoverse under SEC’s purview. The agency chair Gary Gensler also previously noted that Bitcoin is not a security. However, his stance dubbed most of the other digital tokens as securities.

The SEC stated that its enforcement division did not make formal delisting requests to companies. But the agency makes recommendations, as per the report.

Armstrong told FT,

“They came back to us, and they said . . . we believe every asset other than bitcoin is a security.”

Armstrong explained that Coinbase had no choice but to challenge the SEC’s request in court. The chief noted that compliance would have led to severe implications for the crypto industry in the United States.

The Classification Debate Continue

The SEC and the Commodity Futures Trading Commission (CFTC) have been vying for control of the crypto market. The CFTC also filed a lawsuit against Binance in March before the SEC followed suit.

Last week, the congressional committee approved a bipartisan bill to create a regulatory framework for cryptocurrencies. The bill aims to segregate the jurisdictions of the two agencies by defining when a cryptocurrency is considered a security or a commodity.

In a recent letter to the SEC, Grayscale raised fresh concerns. It noted that the Surveillance Sharing Agreement (SSA) between Coinbase and asset managers seeking approval for a spot Bitcoin ETF might not meet the agency’s standards.

Grayscale argues that the Coinbase SSA should not be the sole factor influencing the regulator’s decision. Meanwhile, the Coinbase (COIN) stock price is sitting close to $94 in pre-market trading.

But the exchange has lost over 70% of its value since it went public.