The news of the SEC’s move against Coinbase, the largest cryptocurrency exchange in the United States, spread like wildfire through the crypto world, sparking an existential debate over what it could mean for bitcoin in the United States.
“It should be evident by now that the Biden Administration wants all crypto—even the legitimate elements of it—to be run out of the US,” Custodia Bank founder and CEO Caitlin Long tweeted. “See also yesterday’s White House economic report, which slammed all financial innovation while praising conventional banks’ “stability.”
Long and others questioned the SEC’s abrupt delivery of a so-called “Wells Notice” after allowing Coinbase, a publicly traded business, to give staking incentives for several years and now threatening to prosecute Coinbase for trading unregistered securities.
“During the past 9 months, [Coinbase] has met with the SEC more than 30 times, revealing specifics of our business in order to construct a route to registration,” wrote Paul Grewal, Coinbase’s Chief Legal Officer. “At this time, the SEC has provided virtually no feedback on what should be changed or how to register.” Instead, we received a Wells notification today.”
A Wells Notice is a notification from the Securities and Exchange Commission advising a corporation that the agency intends to launch an enforcement action against them.
“From day one, @coinbase has invested substantially in becoming fully compliant with US legislation,” Chris Dixon, general partner at Andreessen Horowitz, wrote.
“The United States has a long history of encouraging innovation, and regulators have played an important role in establishing clear standards and prosecuting bad actors,” Dixon added. “We expect that the United States would take a more collaborative approach to working with entrepreneurs while protecting consumers.”
Numerous people have shown their support for Coinbase, with Adam Cochran, founder of Cinneamhain Ventures (CEHV), claiming he will “vote with my wallet” and become a customer if Coinbase challenges the agency.
While many were quick to blame the SEC, others seized the opportunity to criticize the company, including many in the XRP community who were still irritated by Coinbase’s removal of XRP from the Coinbase Wallet last October.
Ripple Labs has been fighting the SEC in court since December 2020, when the agency accused the business, whose founders created XRP in June 2012, of deceiving investors and raising $1.3 billion in unregistered securities.
“I doubt I’ll ever understand how the SEC can approve off on @coinbase going public and then raise all these objections,” attorney Bill Morgan tweeted. “Forget crypto, how is the SEC safeguarding Coinbase shareholders with this heinous behavior?”