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- Crypto industry observers believe the SEC is protecting Wall Street firms instead of retail investors.
- The regulator’s actions have derailed the track record of Coinbase.
Some suspicions have risen in the minds of many cryptocurrency observers about the recent happenings between the United States Securities and Exchange Commission (SEC) and the broad crypto industry. Gary Gensler, SEC Chair, has been accused of cracking down on crypto exchanges like Kraken, Coinbase, and Binance as a strategy to protect the traditional financial services industry like BlackRock and JPMorgan from being disrupted.
Netizens believe that the entire talk about protecting investors was just a make-believe by the SEC to protect “someone else”.
On looking through the enforcement actions which have been levied on crypto firms by several U.S. agencies, it was concluded that it does not meet the standard of protection. The crackdown of crypto-friendly banking institutions; Silvergate Bank, Signature Bank, and Silicon Valley Bank which happened earlier this year, and the long list of regulatory enforcement actions suggests another objective of the regulator.
SEC Tampers With Coinbase’s Impeccable Track Record
Taking into consideration the SEC lawsuit against American crypto exchange Coinbase over unregistered securities, the firm prides itself as one of the few stainless outfits in the nascent crypto space.
Before the enforcement actions, none of its clients, which includes large asset managers, Fortune 100 companies, and the U.S. government itself, had even complained of the quality of service which Coinbase offers. Compared to FTX which imploded in November 2022, Coinbase has no record of defrauding customers or commingling their deposits.
The exchange’s platform has never mentioned any incident of hacking or a breach on its network, nor does it base itself in an offshore tax haven. Coinbase was one of the crypto firms that pushed for regulation to the point of submitting a petition against the regulator in July 2022 seeking clarity on the subject.
After a long time of silence from the SEC, Coinbase received a 96-page lawsuit filled with contradictions and talks about operating an unregistered broker and exchange operator, violating regulatory requirements.
This action by the SEC was likened to a town that refuses to tell you what the speed limit is but keeps issuing speeding tickets. Paul Grewal, Coinbase’s chief legal officer, drew the attention of the public to the timing of the SEC lawsuit. According to Grewal, the lawsuit was released about one hour before Coinbase was set to testify on crypto legislation before the House Committee on Agriculture.
Also, it is worth noting that BlackRock’s application for a spot Bitcoin (BTC) Exchange Traded Fund (ETF) came a few weeks after the two separate enforcement actions were levied on Coinbase and the industry’s biggest digital asset service provider Binance. Since then, it looks like institutional investors’ interest in the crypto space has increased. Many more investment asset management companies have equally applied for a spot BTC ETF.
Currently, BlackRock, Bitwise, Invesco, and WisdomTree are pressuring the SEC to approve the first Bitcoin ETF in the country. Now, the SEC has approved the first leveraged BTC Futures ETF.
