Report: SEC Asked Coinbase to Delist All Crypto Assets Except Bitcoin Prior to Filing Lawsuit

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Report: SEC Asked Coinbase to Delist All Crypto Assets Except Bitcoin Prior to Filing Lawsuit

According to Brian Armstrong, the CEO of crypto exchange Coinbase, the U.S. securities regulator reportedly told his company to delist all digital assets save for bitcoin. Armstrong said acceding to the SEC’s demand would have “meant the end of the crypto industry in the U.S.”

SEC Reportedly Refused to Explain Why It Classifies Digital Assets as Securities

Prior to suing Coinbase, the U.S. Securities and Exchange Commission (SEC) reportedly asked the cryptocurrency exchange to delist all other digital assets except bitcoin. Brian Armstrong, the founder and CEO of Coinbase, claimed in an interview with the Financial Times that the U.S. regulator’s stance suggested it considered every other digital asset a security.

According to the CEO, the SEC only filed its lawsuit against Coinbase after the latter ignored the regulator’s advice. However, in its lawsuit filed on June 6, the SEC only identified 13 coins as assets that meet the SEC criteria for investment contracts. Besides accusing Coinbase of selling unregistered securities, the regulator said the crypto exchange had failed to register its staking-as-a-service program.

SEC Denies Asking Companies to Delist Crypto Assets

Commenting on the crypto exchange platform’s encounter with the SEC just before the lawsuit was filed, Armstrong said the regulator even refused to explain why it wanted the trading of other assets to be halted.

“They came back to us, and they said … we believe every asset other than bitcoin is a security. And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than bitcoin,” the Coinbase CEO said.

Armstrong added that when the SEC made the demand, Coinbase chose to go to court because acceding to the regulator’s directive would have sparked the demise of the crypto industry in the U.S.

Meanwhile, the same Financial Times report said the SEC has denied asking “companies to delist crypto assets.” The regulator also suggested that its staff may have created the impression that the SEC views all digital assets except bitcoin as securities, noting:

“In the course of an investigation, the staff may share its own view as to what conduct may raise questions for the commission under the securities laws.”

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