Coinbase may consider relocation if regulatory clarity in the U.S. doesn't improve - CEO
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(Kitco News) - As the regulatory landscape for cryptocurrencies in the U.S. remains uncertain, Brian Armstrong, the CEO of Coinbase – the largest crypto exchange in the U.S. – has suggested that the company may consider relocating to a more welcoming jurisdiction if things don’t improve.
Armstrong made the comments during an interview with CNBC at a London fintech conference on Tuesday while discussing a variety of topics, including the Wells Notice the exchange received last month, which is often a final step before the Securities and Exchange Commission formally issues charges.
“We’ve met with [the SEC] over 30 times in the last year… never got a single piece of feedback from them about what we can be doing better or differently, and then this Wells Notice arrived,” Armstrong said.
The Coinbase CEO called the Wells notice “unfortunate” and said the company has yet to receive any additional information on the specific concerns that the SEC has. “I think we’re going to have to actually end up going to court to get the clarity we need and create the case law,” he said. This would help the industry as a whole by establishing judicial precedent.
When asked if Coinbase was prepared for a years-long battle with the SEC, Armstrong replied, “Absolutely.”
“We never seek litigation but it seems, in this case, they have initiated it and if we need to go to the courts to get the clarity that we need then we are very prepared to do that,” he said.
The CEO also criticized the SEC's lack of clarity for companies in the crypto industry and accused the SEC of an “abdication of responsibility” for failing to publish a clear rulebook for the market. “The regulators’ job is to publish a clear rulebook and allow that market to be safe but also to flourish in that country and I think they’ve completely abdicated responsibility,” Armstrong said.
The SEC continues to maintain the stance that the rules are clear under existing laws. During Tuesday’s hearing in front of the House Financial Services Committee, SEC Chair Gary Gensler once again stated that “the vast majority of crypto tokens are securities.”
In the event that the majority of crypto assets are deemed to be securities, Coinbase would be required to register as a securities exchange in order to continue offering access to those assets.
According to a note from Barclays posted earlier in April, “Under current securities law, securities exchanges are not permitted to offer services directly to retail customers, and Coinbase could theoretically be forced to separate the exchange and broker portions of the business.”
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During his speech at the fintech event in London, Armstrong said that while the U.S. “has the potential to be an important market in crypto,” the lack of regulatory clarity is a major roadblock. This has prompted Coinbase to begin exploring investing more abroad and potentially relocating the company outside of the U.S.
“I think if a number of years go by where we don’t see regulatory clarity around us... we may have to consider investing more elsewhere in the world. Anything including, you know, relocating,” Armstrong said.
The Coinbase boss added that the company is “looking at other markets” to invest in beyond the U.S. and was “probably going to invest more” in the U.K. amid the country’s efforts to establish itself as a crypto hub.
“We’re a business ... like any business we have a budget and we have to decide where to allocate it. And so that means what products we want to build, but it also means what countries we want to invest it in any given year,” Armstrong said. “And with the U.S. kind of lagging a little bit ... we are looking at other markets.”