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Coinbase remains dedicated to serving the U.S. despite global expansion

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(Kitco News) - Brian Armstrong, the CEO of Coinbase – the largest cryptocurrency exchange in the U.S. – has walked back statements that the exchange would consider moving to a more welcoming jurisdiction if the regulatory landscape in the U.S. didn’t improve. However, he continued to criticize the Securities and Exchange Commission’s (SEC) approach to reining in the crypto industry.

According to Armstrong, who spoke to CNBC’s Dan Murphy on Monday, SEC chair Gary Gensler has adopted an oppositional approach to the crypto ecosystem and is focused on limiting it as opposed to developing meaningful regulations.

“I don’t think he’s necessarily trying to regulate the industry as much as maybe curtail it,” Armstrong said. “But he’s created some lawsuits, and I think it’s quite unhelpful for the industry in the U.S. writ large, but it also is an opportunity for Coinbase to go get that clarity from the courts that we feel will really benefit the crypto industry and also the U.S. more broadly.”

The focus of Gensler’s campaign against the crypto industry centers around the classification of digital assets, virtually all of which the SEC Chair maintains are securities. Coming from this view, exchanges like Coinbase that offer investors access to these assets are selling unregistered securities, which falls squarely under the enforcement purview of the SEC.

“The SEC is a bit of an outlier here,” Armstrong said. “There’s kind of a lone crusade, if you will, with Gary Gensler, the chair there, and he has taken a more anti-crypto view for some reason.”

Deviating from his previous statements regarding the possibility of exiting the U.S. due to the hostile regulatory environment, Armstrong said that Coinbase remains dedicated to being the top-rated exchange for U.S. citizens and will not leave the country despite the ongoing regulatory uncertainty that the company is facing.

“Coinbase is not going to relocate overseas,” Armstrong said. “We’re always going to have a U.S. presence [...] But the U.S. is a little bit behind right now.”

The Coinbase CEO highlighted the recent developments in the EU, which include the passage of the Markets in Crypto-Assets (MiCA) law that lays out an EU-wide regulatory framework for digital assets, as evidence that the U.S. is losing ground.

“I would say we’re seeing more thoughtful approaches, for instance, in the EU [European Union], they’ve actually already passed comprehensive crypto legislation, the U.K. has been incredibly welcoming, and for us there, and that’s been a hub where we’ve decided to serve the UK market,” he said.

While the exchange remains dedicated to serving the U.S. public, it also plans to continue expanding its international investments, with Armstrong saying they are “very interested” in the United Arab Emirates (UAE) as a country to do more investment in.

Armstrong was actually doing the interview with CNBC from Dubai, where he and the Coinbase executive team were meeting with local representatives to discuss the potential for the UAE to become “a strategic hub” for the exchange.

“[The UAE is] exciting for us as a potential hub to build as well, an international hub for Coinbase that could serve not only in the Middle East but parts of Africa or other countries in Asia,” Armstrong said at the Dubai Fintech Summit on May 8. “I think the U.S. right now is a little bit behind in terms of regulatory clarity and some of the rhetoric from the top.”

According to a blog post about the trip, Coinbase is in talks with regulators in the Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority as part of efforts to potentially expand into the region.

“There is no doubt that UAE has the potential to be a strategic hub for Coinbase, amplifying our efforts across the world,” the blog said. “It further serves as a particularly strategic bridge between Asia and Europe - two of our existing focus international regions to date.”

Coinbase launches new offshore derivatives exchange amid two new lawsuits

Aside from promising demographics, Coinbase is interested in the region due to the establishment and ongoing development of cryptocurrency regulation.

The regulations established in the UAE thus far have focused on four objectives: “being business-friendly; protecting consumers; projecting the UAE’s regional leadership as a ‘center for the fourth industrial revolution’; and ensuring that activities comply with Financial Action Task Force money laundering guidelines.”

“In short, the region is standing-out as a leader in the development of a web3 ecosystem, making it an attractive location to consider investing in,” Coinbase wrote. “The vacuum created by other notable jurisdictions means that international counterparts, such as the UAE, are racing to fill the regulatory gap.”

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