SEC's Strong-Arm Demand To Coinbase: A Potential Market Crash Or Boon For Bitcoin?

In the wake of the U.S. Securities and Exchange Commission's (SEC) directive to Coinbase COIN to halt trading on all cryptocurrencies except Bitcoin BTC/USD, industry experts argue that these actions could violate the financial watchdog's mission of protecting investors and potentially trigger a market crash.

Experts also highlight the potential long-term benefits of Bitcoin and call for regulatory clarity to prevent businesses from moving outside the U.S.

The SEC instructed Coinbase to halt trading on all cryptocurrencies except Bitcoin, prior to initiating legal action against the company, according to the company's CEO Brian Armstrong.

The SEC had recommended the delisting of over 200 tokens offered by the exchange, identifying 13 of them as securities. 

However, the SEC did not provide an explanation for their conclusion, which diverges from Coinbase's interpretation of the law.

Given the potential implications of such a delisting for the entire crypto industry in the U.S., Coinbase decided to contest the SEC’s demand in court to seek legal clarity. 

Dave Weisberger, the CEO, and co-founder of CoinRoutes, an algorithmic-trading platform for the digital asset industry, expressed concern over the SEC's actions.

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He stated, "If this is true – and so far it’s just an allegation – this would prove that the SEC violated their mission of protecting their investors."

He further noted that a forced delisting could trigger investor panic, forced selling, and a market crash, which is precisely what the SEC was created to prevent.

Anthony Cerullo, Chief Communications Strategist at Walbi, highlighted the potential upside for Bitcoin.

He suggested that the SEC's apparent bias towards Bitcoin could bring stability and serve as a promising source of attraction for Bitcoin, primarily for institutional investors looking to gain exposure to the cryptocurrency.

Jack Vinijtrongjit, co-founder and CEO of AAG, called for greater transparency from the SEC.

He urged the regulator to clearly explain their decision-making process and provide a clear procedure around it.

He also warned that the SEC's ambiguous stance could lead crypto-related businesses to move outside the U.S.

Joonatan Lintala, CEO and Co-founder at Phaver pointed out the shift in focus of Web3 projects due to the recent lack of clarity and unfounded legal attacks in the U.S.

He noted that many global projects, including Phaver, have shifted focus completely away from both U.S. funding and users in favor of Asian markets like Japan and Hong Kong.

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