By Larry Wright
Coinbase is the largest cryptocurrency exchange platform operating out of the USA. On the other hand, it is also the first cryptocurrency firm to go for a public listing. However, the circle of legal freedom around Coinbase has started to tighten.
It is the result of regulatory action by US government officials. In the past, Coinbase has complied with all the policies of US regulators, such as banning the accounts of Russian oligarchs as part of the economic boycott mandate of the US government.
Coinbase is currently under investigation by US regulators for operating 9 unregistered securities on its platform under the guise of cryptocurrencies. Coinbase officials have claimed in the past that the increasing pressure from the US government can drive these businesses out of the country.
However, recently the firm has decided to realize its previous convictions. Coinbase officials have recently reported starting of a new cryptocurrency exchange outside the jurisdiction of the USA.
Coinbase is Facing Regulatory Pressure
Coinbase is not the only cryptocurrency firm that has faced regulatory pushback from regulators. At present, many government officials are trying different cryptocurrency projects to bear the responsibility of the current banking crisis in the country.
Coinbase officials have now formally shared their intention of setting up a cryptocurrency exchange outside of the US jurisdiction.
In a recent article, Coinbase shared with the media that it is planning to move to offshore jurisdictions taking some of its major commercial clients. The firm shared that, at present, the cryptocurrency industry within the USA is facing heat from US regulators on account of the recent banking failures.
However, the government has mandated most cryptocurrency exchanges under their jurisdictions to operate as centralized and regulated entities. At the same time, the US government is also giving aid to save some of its biggest venture capital stakeholders and other depositors, including the stablecoin project Circle.
During the last few days, SEC has brought several lawsuits on cryptocurrency entities, including the Kraken exchange. The government regulator has maintained that it intends to try all PoS blockchain projects as unregistered securities.
SEC Chief has pointed out that staked cryptocurrency projects are unregistered securities because they are based on a group of entrepreneurs. The holders of these cryptocurrencies depend on the performance of these projects to make profits, much like a private limited company.
However, the implementation and testing of the Howey test for cryptocurrencies are still controversial as most cryptocurrencies do not offer ownership rights to their investors like securities.
To this end, SEC barred Kraken exchange from offering staking services and imposed a hefty fine of $3 billion. The prospective Coinbase venture has not nominated the new location, but it intends to offer services to international clients.