The case of Coinbase vs. SEC
Why the FUD is overrated
On April 14, 2021, the time had come. The crypto exchange Coinbase went public. This did not happen as an IPO (initial public offering) but as a direct listing on the Nasdaq.
The difference between these two forms is that in an IPO, new shares are offered, while in a direct listing, existing shares are offered by existing investors on the market. Thus, investors could now also invest in a crypto company and participate in the hype via the traditional market without having to deal with corresponding crypto coins.
Between the IPO and June 5, 2023, the US government sold crypto assets confiscated from fraud through Coinbase.
Today, on June 6, 2023, the SEC is suing the crypto trading platform Coinbase. The allegation is that Coinbase has been operating without registering with the supervisory authority since as early as 2019.
For me, this shows once again that the SEC is not really working in the interests of investors. It should be noted that the SEC approved the IPO of Coinbase. So, not registering with the regulators and acting since 2019 should have been noticed back then. Likewise, it would mean that the US government would have sold its crypto assets through a non-registered exchange.
Coinbase rightly criticizes that there is still no clear framework or rules for digital assets.
Coinbase’s share price has dropped almost 10% with this news, hurting investors as well.
In addition to the lawsuit against Coinbase and Binance, the SEC also classified some of the crypto currencies as securities, as you can see in the following table.
I don’t think much needs to be said about this. The SEC seems to be confused or rather demonstrates how important it is to establish clear rules in the digital currency sector.
The crypto community has been hoping for a clear set of rules for quite some time. Without this, the U.S. shoots itself off to the side as a crypto innovation country.
China is already taking the first steps to reopen the country to cryptos. This would open up a new facet of the rivalry between the BRICS states and the West.
However, what does the classification of some cryptos as securities mean for the industry?
Any exchange that has a license to offer securities can continue to offer the coins classified as securities. Again, it is important that there is a framework from the SEC that clearly outlines which coins can be considered securities and which cannot. In other words, there needs to be some kind of checklist for the exchanges that allows them to independently check whether the crypto currency is a security or not. Otherwise, exchanges would be treading on legally uncertain ground with each new crypto currency they offer.
Furthermore, coins classified as securities could be traded on the stock market in the future. However, for this to happen, all the coins of a crypto currency would have to be in circulation. Just like stocks on the stock market, crypto currencies would also have to file regular reports on profit and loss and other governance issues. This also creates security and transparency for investors.
Consequently, coins that are a good product and deliver a function can get through this phase and register as a security.
Source: https://twitter.com/DrProfitCrypto/status/1667595543101550595
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