By George Ward
Many in the crypto community see the recent enforcement action by the US Securities and Exchange Commission (SEC) against Coinbase as a gang-up to stifle the fledgling industry. Following Coinbase’s receipt of a Wells Notice, the crypto industry has supported the digital asset service provider.
SEC Issues Coinbase Wells Notice
According to the CEO of Custodia Bank, Caitlin Long, all crypto exchanges were sent a Wells Notice by the securities watchdog in early February, but many kept mute about it. Long points out the coordinated crackdown against Paxos and Kraken indicates that regulatory agencies in the United States are targeting crypto platforms.
Meanwhile, Coinbase CEO Brian Armstrong posted a Twitter thread in reaction. In the tweet, Armstrong stated that this is part of the journey to redefine the US financial sector positively.
Armstrong hopes the US legal system will shine the light on the SEC as an unfair and biased agency. He added that the commission has yet to show its purpose of being a regulator when interacting with the digital asset ecosystem.
As expected, the crypto community has shown its support for Coinbase. David Marcus, Lightspark’s co-founder, states that the exchange has remained compliant with the rules in its engagement with regulators. He slammed the SEC’s high-handedness, questioning why the watchdog always treats non-compliant firms better.
In a similar move, Sandeep Nailwal, co-founder of Polygon, disclosed that the situation is confusing because Coinbase is the leader in compliance with authorities. He also questioned the motive behind the SEC’s continued attack on the crypto industry.
A Ploy To Implement CBDC?
Also, analysts pointed out that the enforcement against Coinbase makes no sense. However, an Angel Investor known by the Twitter alias @jason believes the current scenario is a powerplay to discourage crypto adoption.
He added that no one in a position of power would willingly allow their business to be dominated by emerging financial innovation. Likewise, VanEck’s Strategy Advisor, Gabor Gubacs, echoed a similar sentiment by stating that the latest events are an all-out war against cryptocurrency and regional finance.
He noted that this is a show of force to enforce compliance at a time that the United States recently released its revised central bank digital currency (CBDC) paper. For his part, Arthur Hayes, the former chief executive at BitMEX, opined that regional banks are under pressure after the Bank Fund Term Program (BFTP) announcement that it will no longer cover the classes of assets held by smaller financial institutions.
Hayes noted that the stress would be on banks who have most of their loan books on non-US Treasuries and non-mortgage-insured securities. While many are concerned about the future of regional banks, Hayes believes that the Federal Reserve may intervene and back all assets a bank can hold.