“Imposing securities law onto stablecoins through enforcement instead of guidance or dialogue with the industry will push innovation offshore and weaken our global role.” This statement was made by Coinbase on Wednesday, in response to the recent attack on the BUSD stablecoin by the U.S. SEC.
The United States Securities and Exchange Commission led by Gary Gensler made the US dollar-denominated stablecoin, BUSD, its next victim after attacking Kraken exchange, claiming that the top U.S. centralized exchange overstepped the securities law.
On February 9, the financial regulator charged Kraken for not registering the offer and sale of its crypto asset Staking-as–a–Service (SaaS) program, compelling the centralized crypto exchange to pay a sum of $30 million for settlement.
A few days later, the SEC issued a ‘Wells Notice’ to Paxos, threatening the Binance-branded stablecoin issuer with a lawsuit over BUSD. Subsequently, the New York Department of Financial Services (NYDFS) per a public alert “ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance regarding Paxos-issued BUSD”.
Notably, rumors have it that the SEC is equally planning to crack down on the staking program offered by Coinbase. Unlike Kraken, Brian Armstrong reportedly said that Coinbase would toe the line of Ripple and Brad Garlinghouse and battle with the SEC in court in an event of any securities law violation lawsuit.
Coinbase Counters SEC Claims on Stablecoins
According to the largest U.S-based centralized exchange, stablecoins are not securities. Brian Armstrong’s Coinbase tweeted this on Wednesday, adding that they know what aspects of BUSD might be of interest to the SEC.
“Remember, stablecoins are already regulated. Paxos is regulated as a NY Trust Company by NYDFS. USDC is regulated as a stored value instrument, just the same as a simple money order is, under US state money transmitter laws,” Coinbase wrote.
Coinbase further condemned the SEC’s move on the Paxos-owned BUSD, citing that imposing securities law onto stablecoins would only push crypto innovation away from the United States. Recall that Ripple CEO Brad Garlinghouse revealed that the San Francisco-based cross-border payment firm would move its services away from the United States if they lose in the ongoing XRP lawsuit.
In addition, the top CEX explained why U.S. regulators must foster stablecoins developments, highlighting the roles of the volatility-resistant crypto asset class in creating a more equitable and efficient financial system.
Read Also: SEC Sues Do Kwon and Terraform Labs Over TerraUSD (UST) Stablecoin Collapse
Furthermore, Coinbase remarked that dialogue between regulators and the crypto industry’s top players followed by clear rules for the nascent space is the only way the SEC and other regulatory bodies would get it right.
“This is how we ensure the promise of greater financial accessibility, efficiency, and innovation that safe technology like stablecoins can provide in the US. Not through threats of litigation without explanation or a basis in existing law,” part of the thread read.
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