The US crypto industry needs regulatory clarity, which can only come from Congress or through case law, Coinbase CEO Brian Armstrong told The Wall Street Journal.
Armstrong said there is an ongoing power struggle between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) and Coinbase is “caught in the middle” of this territorial war between the agencies.
The SEC and CFTC have contradicted each other in the past – the CFTC has claimed that certain assets, such as Ethereum, are commodities, while the SEC calls them securities.
Since the two agencies have been unable to reach an agreement on the status of cryptocurrencies as securities or commodities, we need clarity, Armstrong said. And for this clarity, Congress must step in and legislate, he said.
But until we have legislation, the industry will depend on case law arising from lawsuits like the one filed by the SEC against Coinbase last week, he said.
Armstrong says Coinbase only listed crypto commodities
In its lawsuit, the SEC alleges that thirteen of the assets listed on Coinbase are securities. But Coinbase rejects the claims.
Armstrong said that Coinbase reviews tokens carefully before listing them and rejects 90% of assets reviewed. The listing process involves “rigorous analysis” and there is a “stack of paper” for every asset listed on the exchange, he said. And he “feels” that the tokens listed on Coinbase are commodities and not securities.
According to Armstrong, the exchange was constantly asking the SEC for guidance — asking them if certain tokens were “okay” to be listed. But since Coinbase never received feedback from the SEC, it had to create its own process.
Coinbase has a digital asset listing committee, of which Armstrong is not a member, that reviews tokens for listing. The commission considers several factors before approving an asset for listing, including a legal analysis of whether it’s commodities or securities, Armstrong said.
Armstrong added that Coinbase shared its framework for distinguishing between crypto securities and commodities with the SEC before going public. The SEC’s silence forced the exchange to rely on its own listing committee, which is composed of the “best legal minds in the world,” he said.
The US will eventually get to the “right outcome” for crypto
Armstrong believes any clarity from the courts, regardless of the outcome, will be a “step in the right direction”. But he is confident that even if it takes a few years, the US will eventually get to the “right outcome”.
This “correct outcome” could come from the courts, through Congressional legislation or after the 2024 presidential election, Armstrong said.