Coinbase CEO Brian Armstrong recently stated that the crypto exchange could move away from the United States if there continues to be a lack of clarity regarding regulation of the industry.
Let’s take a detailed look at what is going on.
Coinbase on crypto regulation
As anticipated above, Coinbase CEO Brian Armstrong has indicated that the cryptocurrency exchange would consider moving away from the United States if the regulatory environment for the industry does not become clearer.
Specifically, after former UK Chancellor George Osbourne asked him whether it might occur that Coinbase would leave the United States at Fintech Week in London, Armstrong said:
“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.”
Not only that, on the sensitive issue of crypto regulation the Coinbase CEO concluded:
“I think in a number of years if we don’t see regulatory clarity emerging in the US, we may need to consider investing more in other parts of the world.”
Armstrong’s comments come weeks after rival exchange Bittrex said it plans to exit the United States by the end of April, citing the current unclear US regulatory and economic environment.
Coinbase CEO clarifies his position on how the industry should be regulated
Another crypto exchange, Bittrex, received a Wells warning in March, according to general counsel David Maria‘s statement to the Wall Street Journal.
To recall, a Wells notice is a statement that the Enforcement Division of the US Securities and Exchange Commission (SEC) found evidence of legal violations.
Hence, the SEC filed a lawsuit against the exchange on Monday. At that point, Armstrong compared the situation in the United Kingdom, where there is only one regulator, the Financial Conduct Authority (FCA), responsible for both commodities and securities, with that in the United States, where there are separate bodies: the Commodity Futures Trading Commission (CFTC) and the SEC. Regarding this, Coinbase’s CEO said:
“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.”
Just like Bittrex, Coinbase also received a Wells notice from the SEC in March. Regarding this, Armstrong said Coinbase met with the SEC thirty times without receiving feedback on the nature of its business before receiving the notice.
In addition, the exchange CEO pointed out the lack of distinction or nuance in how regulators view different branches of the cryptocurrency industry.
Meaning that exchanges like Coinbase should be regulated like financial services companies, while decentralized areas of the industry should be managed very differently because there is no central authority to regulate.
“Things like Bitcoin, Ethereum, DeFi, and even self-custodied wallets should be regulated like a software company or something like that.”
Coinbase and decentralized identity: the Ethereum Base network
In addition to crypto regulation, Armstrong also recently talked about decentralized identity as one of the most compelling use cases for blockchain technology beyond cryptocurrency, 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.”
Not surprisingly, earlier this year, Coinbase unveiled Base, a Layer 2 Ethereum network on which developers can create decentralized apps (dApps), sending a signal that goes beyond trading digital assets to develop and expand the broader uses of blockchain technology.
Even more specifically, we see that Base is a secure, low-cost, developer-friendly Ethereum L2 created to bring the next billion users to Web3. Hence, with this goal clearly in mind, Base serves as both a home for Coinbase’s onchain products and an open ecosystem where anyone can build.