- SEC plans to take enforcement action against Coinbase.
- Coinbase claims SEC lacked adequate information in Wells’ notice.
- Armstrong asserts staking services are not subject to securities laws.
In a major escalation of its crackdown on digital currency firms, the Securities and Exchange Commission (SEC) has informed Coinbase Global Inc. that it plans to take enforcement action against the company. The move marks a significant development in the regulatory landscape for cryptocurrencies as the SEC sets its sights on the largest U.S. crypto exchange.
1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.
— Brian Armstrong (@brian_armstrong) March 22, 2023
According to reports, Coinbase confirmed the news on Wednesday as it braces itself for what could be a challenging legal battle with the securities regulator. The implications of this action could be far-reaching for the wider digital currency industry as regulatory scrutiny of the sector continues to intensify.
In a blog post, Coinbase claimed that the Wells notice they received from the SEC lacked adequate information for them to provide a meaningful response. However, the SEC staff did inform Coinbase of a potential breach of securities law without giving much detail.
Moreover, when asked to specify the assets on the Coinbase platform that may be considered securities, the SEC declined to do so. In addition, Coinbase claimed that despite sending the SEC many registration proposals for several months, the regulatory agency has yet to respond.
In light of the ongoing controversy over Coinbase’s staking services, the firm’s CEO, Brian Armstrong, has been steadfast in his position that the service does not meet the security criteria. According to Armstrong, because customers never relinquish their assets to Coinbase, the staking product should not be subject to securities laws.
Instead, Coinbase merely provides a service that allows customers to participate in staking. Armstrong has also clarified that the company is willing to defend its stance in court if necessary.