In a recent statement, Brian Armstrong, the CEO of Coinbase, expressed concerns over the lack of regulatory clarity in the US and warned that the company may need to relocate if the situation persists.
Brian Armstrong, the CEO of Coinbase, recently said that if there is still uncertainty about how the business will be regulated, the crypto exchange may leave the United States.
Let’s examine the situation in more detail.
Coinbase on regulating cryptocurrencies
As mentioned above, Brian Armstrong, the CEO of bitcoin exchange Coinbase, has said that if the regulatory landscape for the sector is not clarified, the company may consider leaving the United States.
At Fintech Week in London, former UK Chancellor George Osbourne questioned Armstrong specifically about the possibility that Coinbase will depart the US. Armstrong responded as follows:
“Everything is on the table, including transfer or whatever else is needed. I think the US has the potential to be an important market for cryptocurrencies, but right now we don’t see the regulatory clarity we need.”
Additionally, the CEO of Coinbase expressed his views on cryptocurrency regulation, stating that if regulatory clarity does not emerge in the US, the company may need to expand its investments in other regions around the world in the coming years.
Armstrong’s remarks come after rival exchange Bittrex announced it would leave the US by the end of April, citing an uncertain regulatory and economic climate there.
Coinbase’s CEO discusses sector governance
According to general counsel David Maria’s comments to the Wall Street Journal, another cryptocurrency exchange, Bittrex, received a Wells warning in March.
Remember that a Wells notice is a declaration that the US Securities and Exchange Commission’s (SEC) Enforcement Division has discovered evidence of legal wrongdoing.
As a result, on Monday, the SEC sued the exchange. Armstrong then contrasted the situation in the United States with that in the United Kingdom, where there is only one regulatory body, the Financial Conduct Authority (FCA), in charge of both commodities and securities. In the United States, the Commodity Futures Trading Commission (CFTC) and the SEC are separate organizations. The CEO of Coinbase commented on this:
“This unfortunate thing where the CFTC and the SEC are fighting a turf battle doesn’t happen. We actually have conflicting statements from the heads of the CFTC and the SEC coming out almost every few weeks. How is a company going to function in that environment? We just want a clear regulation.”
Coinbase also received a Wells notice from the SEC in March, just like Bittrex did. Armstrong stated that before receiving the letter, Coinbase met with the SEC thirty times without getting any comment on the nature of its business.
The CEO of the exchange further emphasized that regulators’ perceptions of various segments of the bitcoin business lack differentiation or complexity.
Meaning that decentralized portions of the sector should be controlled completely differently because there is no central authority to regulate, while exchanges like Coinbase should be regulated like financial services organizations.
In his opinion, Bitcoin, Ethereum, DeFi, and even self-custodied wallets should be subject to regulation similar to that of a software firm.
The Ethereum Base network and decentralized identity: Coinbase
Armstrong has discussed decentralized identification as one of the most compelling use cases for blockchain technology beyond cryptocurrency, in addition to crypto regulation, stating:
“Decentralized identity is a way for people to have their own information, because they actually own it. Decentralized social media is on the horizon. I think that’s pretty important in terms of freedom of speech.”
Unsurprisingly, Coinbase introduced Base earlier this year, a Layer 2 Ethereum network on which programmers may build decentralized applications (dApps). By doing so, Coinbase sent a signal that goes beyond trading digital assets to develop and expand the more general uses of blockchain technology.
Base is a safe, inexpensive, and developer-friendly Ethereum L2 designed to attract the next billion Web3 users. Therefore, Base serves as both a home for Coinbase’s onchain products and an open ecosystem where anyone can build with this objective in mind.
