In a recent interview with The Wall Street Journal, Coinbase CEO Brian Armstrong expressed his views on the future of the cryptocurrency industry in the United States.
According to Armstrong, the key to unlocking the industry’s potential lies in regulatory clarity, which can only be achieved through congressional action, establishing case law, or after the 2024 presidential elections.
Caught in the Middle of a Power Struggle
Armstrong highlighted the ongoing power struggle between two American regulatory bodies, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), stating that Coinbase has found itself “caught in the middle” of the war. This struggle has created a state of uncertainty within the industry, hindering its growth and development.
His statements shed light on the series of events that led to the current situation. In 2021, Coinbase went public, providing a comprehensive overview of its business operations and the assets listed on its platform. At that time, the SEC approved Coinbase’s public offering.
However, approximately a year later, the SEC’s stance began to shift, resulting in conflicting statements and a need for more clarity from the regulatory agency.
Brian Armstrong further explained that Coinbase has been proactive in engaging with regulators whenever there have been updates or changes in regulations. The company has shown a willingness to comply and make the necessary adjustments.
For instance, when the SEC expressed concerns about XRP possibly being a security, Coinbase delisted the asset, awaiting a conclusive determination.
The numbers don't lie. pic.twitter.com/lec4wkp6RO
— Coinbase 🛡️ (@coinbase) June 6, 2023
Unfortunately, the SEC’s communication with Coinbase became increasingly vague and unresponsive, culminating in issuing a Wells notice and eventually filing a complaint against the crypto company.
According to the CEO, the situation reflects a form of “regulation by enforcement,” where clear rules and guidelines are absent. The SEC’s broad assertion that everything other than Bitcoin is considered a security does not bode well for the future of the crypto industry in the United States.
Coinbase CEO highlights solutions to crypto regulatory uncertainty
To resolve the regulatory uncertainty, Armstrong believes that Congress must intervene by drafting legislation that provides clear guidelines for the industry. He mentioned that draft bills are already being created in Congress, highlighting the growing awareness among lawmakers that the United States risks falling behind other global financial hubs in adopting and regulating cryptocurrencies.
Moreover, he stated the possibility of the “right outcome” being achieved after the 2024 presidential elections. With a potential change in leadership, there could be an opportunity for a fresh perspective on crypto regulation. However, he noted that relying solely on political cycles could result in delays, and the industry needs proactive steps to provide regulatory certainty sooner rather than later.
Armstrong also emphasized the importance of case law in clarifying the classification of different crypto assets. By challenging the crypto-skeptic financial regulator in court, Coinbase aims to contribute to the establishment of case law, which would provide much-needed clarity for the industry and facilitate its growth.
