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Coinbase CEO Brian Armstrong has warned that a hostile regulatory approach by the Securities and Exchange Commission could drive the crypto industry out of the United States.
In a televised interview with Bloomberg Wednesday, Armstrong… Said Nearly all major financial centers have introduced comprehensive crypto legislation, including Singapore, Hong Kong, London and more recently the European Union, adding that the US should not lag behind.
“I believe that should be in the United States we need a clear rulebook so that this industry can be built here. We don’t want it to be like 5G or semiconductors that went offshore. Security matters. Let us get the future of the financial system built here inside the United States of America.”
The crypto billionaire reiterated his position regarding the SEC’s recent move to treat Kraken’s staking product as a security amid a broader regulatory crackdown, claiming that staking should not be classified as a security.
“Our staking product is not a security,” he said. “For example, customers never turn their assets over to Coinbase. And we’re really just providing a service that passes those coins through, helping them participate in staking, which Is a decentralized protocol.
In regards to the staking product, Armstrong said, “we stand ready to defend it in court if we need to.” “But we are never looking for a fight. We want to work closely with regulators around the world.”
As noted, the SEC has reached an agreement With crypto exchange Kraken to stop offering staking services or programs to customers in the country.
According to the SEC, Kraken failed to “register the offering and sale of its crypto asset staking as a service program,” which the commission now qualifies as securities. In addition to the suspension of service, Kraken agreed to pay $30 million in disgorgement, pre-judgment interest, and a civil penalty.
In mid-February, Coinbase published a blog post arguing that crypto staking is not a security under the US Securities Act, nor under the Howey test. In short, the blog said that crypto staking does not meet any of the four points of the Howe test, which is used by the SEC to determine whether an investment contract is a security.
Meanwhile, Armstrong said he is “not concerned” over the broader stablecoin sector despite recent regulatory scrutiny around Paxos, a crypto firm that issues Binance’s stablecoin Binance USD (BUSD). He said he is “pretty bullish” on USD Coin (USDC), which is also a dollar-pegged stablecoin issued by Circle.
Two weeks ago, the New York Department of Financial Services (DFS) ordered Paxos to stop mining the BUSD token. In a consumer alert, DFS said it has issued Order “As a result of a number of unresolved issues related to Paxos’ oversight of its relationship with Binance.”
Earlier this week, Coinbase announced Suspension of BUSD trading, saying the stablecoin did not meet its listing standards.