Coinbase CEO hopeful regulatory clash will benefit crypto industry

Coinbase CEO on SEC Lawsuit and Whether Crypto Is a Security | WSJ

Coinbase CEO Brian Armstrong is optimistic that the ongoing clash between his company and federal regulators will bring much-needed clarity to the cryptocurrency industry, regardless of the court’s ruling.

According to Armstrong, the lack of regulatory guidance has left the crypto space in a state of uncertainty for years, with conflicting interpretations of the currently applied rules.

In an exclusive interview with Wall Street Journal, Armstrong emphasized the importance of obtaining regulatory clarity, saying, “The whole point of this case from our point of view is to go get regulatory clarity. Regardless of the outcome of the case, it’s a step towards clarity.”

His remarks came after the Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, accusing the largest U.S. crypto exchange of operating as an unregistered exchange and disregarding investor protections.

Coinbase has responded publicly to the lawsuit, saying the team is “confident in our facts and the law” and welcomes the chance “to finally get some clarity around crypto rules” in court. Armstrong has previously noted that Coinbase is “going to have to actually end up going to court” with the SEC.

Seeking clarity

Coinbase has been actively seeking regulatory guidance for years, but according to Armstrong, the company has always been met with silence. He questioned the enforcement action taken by the SEC, highlighting the lack of a clear rulebook.

“How could there be an enforcement action if there’s no clear rulebook? That doesn’t make sense and doesn’t pass the smell test,” said Armstrong.

Armstrong also expressed his disappointment with SEC Chairman Gary Gensler and the timing of the lawsuit. Just a day before suing Coinbase, the SEC accused Binance, the world’s largest crypto exchange, of mishandling customer funds.

Armstrong maintained that the back-to-back actions were intentional — aimed at painting the entire industry negatively.

When asked about his relationship with Gensler, Armstrong recounted how he had tried and failed to meet with the SEC chief in person when in Washington. Later, the two men were only able to meet virtually instead.

He described the meeting as having an “icy reception.” He expressed his disappointment, saying, “It was unfortunate that we couldn’t somehow get off on the right foot.”

U.S. “falling behind”

Armstrong pointed out that Europe, the U.K., Singapore and Hong Kong had already enacted comprehensive legislation.

“Basically, the U.S. is falling behind. And I think Congress recognizes this,” Armstrong said.

Although the regulatory challenges may prompt Coinbase to shift its budget and investments overseas, Armstrong said the company would remain in the U.S.

“It could definitely shift our budget. But to be clear, we’re the leader in the U.S. We’re not going anywhere. The U.S. is going to get the right outcome. I feel confident with that,” he said.

Coinbase’s defense in court will include highlighting the SEC’s approval of its initial public offering (IPO) two years ago. Armstrong argued that if the regulator had concerns about their operations, they should have been expressed during the IPO process. Securities experts, however, cautioned that the SEC’s approval of an IPO does not guarantee compliance with all federal securities laws.