Coinbase Plays Ball with SEC

Centralized exchanges are starting to line up behind the SEC after Kraken was recently dinged for $30MM by the SEC for failing to register its staking-as-a-service as a security. 

Brian Armstrong, CEO of centralized exchange Coinbase, has said that “his company’s interests run parallel with those of the SEC.” 

Following the collapse of the cryptocurrency exchange FTX last November, regulators have looked at companies involved with digital assets with a greater degree of scrutiny, taking enforcement action against companies that the agency claims are in violation of securities laws…most recently against Kraken. 

Kraken CEO Jesse Powell has been vocal on Twitter following the settlement, stating that the SEC’s so-called “regulation by enforcement” approach “does not help the industry nor consumers.”

While Coinbase has been the SEC’s golden child that can do no wrong, Coinbase’s Chief Legal Officer Paul Grewal has also been critical of the SEC’s approach to regulating digital assets as well as the products and services that may accompany them. “The public shouldn’t have to parse complaints in federal court in order to understand what a regulator expects,” he said recently during an earnings call with shareholders.

While Coinbase does offer staking services, the biggest difference between their offering and Kraken’s is that Coinbase customers do not hand over the ownership of their digital assets to Coinbase while using the staking service. 

Coinbase playing ball with the SEC means that they intend to be at least the one exchange left standing after this industry-wide shakeout occurs.