Coinbase CEO Brian Armstrong has strongly criticized the U.S. Securities and Exchange Commission (SEC) and called for the next chairman to put an end to “frivolous” lawsuits against cryptocurrency companies and apologize to the American people. Armstrong also accused the SEC of inconsistency in its classification of crypto assets.
To support his stance, Armstrong shared a chart displaying various statements made by SEC officials, including a quote from former Commissioner William Hinman in 2018, stating that digital assets cannot be clearly defined as securities. This particular statement has been used by Ripple Labs in their defense against the SEC’s lawsuit.
The conflict between Coinbase and the SEC has been ongoing for several years. In March 2023, Coinbase received a notice from the SEC regarding possible violations of securities laws, specifically concerning certain crypto assets on their platform. Coinbase responded by filing a lawsuit against the SEC in April, demanding new regulations for cryptocurrencies. However, the SEC requested the dismissal of the lawsuit, arguing that they were not obligated to respond promptly to such requests. In June 2023, the SEC filed its own lawsuit against Coinbase, targeting Coinbase, Inc. and Coinbase Global, Inc., but not their CEO and other executives. Despite multiple motions filed by Coinbase, the dispute between the company and the SEC remains unresolved.
The tension between the crypto community and the SEC has intensified with the appointment of Gary Gensler as the head of the SEC. There is speculation that Gensler may resign after the 2024 presidential election, although his official term ends in January 2026. The crypto market is particularly interested in this situation due to Gensler’s controversial stance on digital assets. Depending on the election outcome, a new SEC chairman can be expected, which could bring significant changes in regulatory policies towards the crypto industry.
The crypto community has expressed dissatisfaction with Gensler’s approach to digital assets since he assumed the role of SEC chairman. The commission’s actions have had a noticeable impact on cryptocurrency issuers. The lack of clear rules for determining the status of digital assets in the United States has led the SEC to rely on its own assumptions. Gensler believes that all cryptocurrencies, except Bitcoin, can be considered illegally issued securities. This has resulted in the creation of a “blacklist” that includes Ripple and 68 other cryptocurrencies that the SEC deems unlawfully issued securities. Interestingly, Ethereum, the second-largest cryptocurrency by market cap, was not included in this list, leaving the reasons for its exclusion unclear.
Rumors have circulated regarding who might become the SEC chairman if Donald Trump wins the 2024 presidential election. Dan Gallagher is considered a potential candidate who could replace Gensler. Gallagher previously served as an SEC commissioner and has experience working in various positions within the commission. His familiarity with the SEC’s internal processes and policies, as well as his background in a Republican administration, make him a suitable candidate according to members of the crypto community.
Overall, the appointment of a new SEC chairman may lead to a new era in the development of the American cryptocurrency market. Market participants hope for a more constructive relationship with the new leadership and the establishment of a transparent regulatory environment for the crypto industry.