Despite this, Coinbase cryptocurrency exchange CEO Brian Armstrong said the day before that his company's interests were "aligned" with the regulator's goals in the context of protecting US investors. In addition, Coinbase maintains a "good relationship" with individual members of the Commission - including its chairman Gary Gensler. Such comments are interesting because the Commission has been criticised by everyone in the cryptosphere lately. Here's a closer look at what's going on.

How cryptocurrencies are regulated

According to Decrypt’s sources, Armstrong said the following in his recent interview

We will invest in this good relationship with the SEC. Our interests are aligned.

Coinbase and the Commission have an interest in keeping the digital asset industry “within the perimeter of US regulation” – and this will provide greater consumer protection. However, Armstrong said he wants to preserve the potential innovation that cryptocurrencies can bring to the financial markets.

It’s worth noting that Coinbase’s position in the US market is growing stronger. In particular, according to Kaiko analysts, Coinbase was able to increase its market share among US trading platforms from 40 percent to 50 percent during 2022. This result was achieved at the expense of large traders who were attracted by the reduced trading fees in the fall. Here is the corresponding graph.

After the collapse of cryptocurrency exchange FTX last November, regulators began to keep a closer eye on cryptocurrency companies and take enforcement action against those who are deemed by the Commission to be in violation of securities laws. The situation escalated in February, with regulator Chairman Gary Gensler suggesting that all coins other than Bitcoin could be recognized as securities.

And that already means additional stringent controls for each token issuer, as well as the exchanges that distribute them. However, some legal experts doubt the Commission will be able to pull off such a massive project. After all, there are hundreds of cryptocurrencies in the industry with capitalizations in the tens of millions of dollars, so each of these startups should logically find themselves as defendants in the agency’s lawsuit. It would be physically impossible for the regulator to be involved in hundreds of lawsuits at the same time, which means Gensler’s view is just that for now.

A more radical view on Securities Commission policy is held by Coinbase General Counsel Paul Grewal. Here’s his statement from a recent Coinbase earnings report.

The public doesn’t have to deal with complaints in federal court to understand what the regulator expects.

It's a curious rejoinder that generally reflects the situation with cryptocurrency regulation within the US. Still, companies are now essentially forced to figure out in practice what regulatory framework is relevant to the market, as the same Commission does not provide a clear list of prohibited and permitted activities. Hence the $30 million in fines that cryptocurrency exchange Kraken has now been forced to pay for its US steaming platform. Naturally, these are not the best conditions on the market.

The Commission has already taken action regarding steaking for US customers on the Kraken exchange platform. At the time, its representatives said that such services could be seen as offering unregistered securities. Armstrong, however, is confident that such a fate will not affect his exchange. Staking services on Coinbase are not an offering of securities and have “many differences” compared to the product from Kraken, he said.

Here’s a relevant quote from Brian during a recent interview on Bloomberg TV.

For example, users never transfer crypto assets to Coinbase. We do provide a service that only aggregates these coins and helps them get into the stack. The protocol of the latter is decentralised.

Coinbase’s CEO acknowledged that the exchange has received investigative subpoenas from the Securities and Exchange Commission, but said that these are “really just requests for information”. He also noted that the company is committed to a productive relationship with the regulator over its steaking product, but is prepared to fight in court for its rights if necessary.

Obviously, in this case, it is imperative that other government organisations besides the US Securities and Exchange Commission, including Congress, are involved in shaping the regulation of digital assets. A one-sided approach to regulation could then be avoided.

Ideally, however, the industry’s perspective should also be taken into account when creating regulations because they fully understand what is happening in the niche and what the shortcomings may be.


We believe that the SEC's approach to regulating cryptocurrencies is hardly commendable or commendable. Still, the regulator is using the whip method, punishing cryptocurrency companies for any non-obvious omissions. The Commission does not disclose the limits of their activity, as they are clearly not in place. As a matter of fact, that's why companies are forced to operate and at the same time be prepared for any fines, lawsuits and other problems. And this is clearly not the best approach.


What do you think about it? Share your opinion in our millionaires cryptochat. There we discuss other curious topics that affect the world of decentralized assets in one way or another.

SUBSCRIBE TO OUR CHANNEL ON TELEGRAM. ACEMOON IS ALREADY HERE!