Coinbase seeks clarity in a long-running battle over US regulations. With the recent Wells Notice issued by the Securities and Exchange Commission (SEC) informing the crypto exchange of potential violations of federal securities laws, Coinbase CEO Brian Armstrong has now threatened to relocate away from the US if the situation does not improve. This is as the agency continually fails to provide full legal clarification on the industry.
Seeking UK Web3 Hub: Coinbase’s New Headquarters Amid Legal Disputes
In response to these developments, Coinbase has looked elsewhere for a new potential headquarters. In an interview with CNBC, Armstrong revealed he’s already communicating with the U.K. officials to turn the nation into a Web3 hub. Despite legal disputes in the US, the UK currently stands as the second-highest revenue-generating country for the exchange.
The SEC had provided warnings to Coinbase in the past, yet they failed to make clear what had to be done to achieve full compliance. “We never seek litigation but it seems, in this case they have initiated it. The law is on our side,” remarked Armstrong, implying he may have to take the issue to court in order to get the legal counsel needed to define how federal securities law applies to the crypto industry.
Crypto Cases Heading to Court: Ripple, Grayscale, Bittrex, Coinbase
There’s already growing precedence for crypto cases going to court. Ripple’s well-documented legal battle with the SEC since December 2020 has demonstrated well how such disputes can turn into a multi-year legal tussle. Just earlier this March, court judges were demanding clarity from the SEC lawyer in the case of Grayscale’s Bitcoin Spot ETF. GBTC’s 16% surge on the day was indicative of the growing investor optimism that Coinbase may be able to win their own legal battle.
Cryptocurrency exchange Bittrex is the most recent company to come under scrutiny from the regulator. Last April 17, the SEC charged the company and its co-founder and former CEO William Shihara with running an unregistered national securities exchange and broker. John Reed Stark, former chief of the SEC’s Office of Internet Enforcement, even remarked that “Coinbase is next.”
Navigating US Regulations: Coinbase’s Crypto Ventures
Whilst regulation remains an ever-present struggle, Coinbase has also embarked on developing other ventures, beyond cryptocurrency. Armstrong further discussed the use-case of decentralized identity, as well as decentralized social media. Their Base project, an Ethereum layer 2 service, allows developers to build decentralized apps or dApps.
Coinbase’s current struggles offer a stark insight into the wild West-like state of US regulations surrounding cryptocurrency. If the company’s dispute with the SEC reaches legal waters, it could have far reaching implications for the industry at large. With the possibility of international relocation always looming, 2020 might be the seminal year that determines whether or not the US remains a preeminent hub for crypto.
Coinbase Relocation: Armstrong Talks U.K. Web3 Hub
Coinbase CEO Brian Armstrong has now stated that the crypto exchange may consider relocating away from the US if the Securities and Exchange Commission (SEC) does not relax its stance on cryptos. The regulator has continually failed to provide justifications and clear answers on the application of federal securities laws to the industry, so Coinbase is now left looking elsewhere for a new potential headquarters.
Armstrong is already in talks with U.K. officials to turn the nation into a Web3 hub, as the UK currently stands as the second-highest revenue-generating country for Coinbase. The countries post-Brexit freedom from EU regulations could be a great opportunity for the exchange, however the legal clarity needed for compliance will still have to be found.
SEC Warnings, Coinbase Threats: Crypto Industry’s Legal Battle
The SEC had warned Coinbase in the past, yet did not specify what had to be done to fall in line with the regulations. With this in mind, the CEO has threatened to take the issue to court if necessary, to get the legal counsel required to define how federal securities law applies to the crypto industry.
Ripple’s multiple year dispute with the SEC is a clear indication of the long-term nature this case may take. The much-publicized Grayscale Bitcoin Spot ETF lawsuit has also opened up the opportunity for Coinbase to set a favorable precedent in a much-watched industry.
SEC’s Refusal to Budge: Coinbase’s Future Uncertain
Recent charges against crypto asset trading platform Bittrex and its co-founder William Shihara for operating an unregistered national securities exchange have only added to the suspicion that Coinbase could be next. John Reed Stark, former chief of the SEC’s Office of Online Enforcement, was quick to voice his concerns on Twitter.
Whilst the company struggles with the legal side of things, Coinbase is also getting involved in developing other use-cases for blockchain technology. Their Base project allows developers to build Decentralized Applications (dApps), whilst Armstrong discussed the potential for decentralized identity, decentralized social media, and more.
As the dispute between Coinbase and the SEC continues, so too does the uncertainty surrounding crypto regulations in the US. If the SEC’s refusal to budge results in the relocation of the crypto exchange abroad, it could influence the industry in ways which could be felt for years to come.
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