Coinbase Takes the Bull by the Horns, Tapping into SEC’s Kraken Case for Crypto Clarity

"SEC Charges Kraken with Operating Without Registration, Puts Client Assets at Risk; ADA and SOL Classified as Securities: Implications for Cryptocurrency Regulation and Trading"

Kraken, one of the leading cryptocurrency exchanges, is facing charges from the U.S. Securities and Exchange Commission (SEC) for operating without proper registration and endangering client assets. The SEC has also classified several cryptocurrencies, including ADA and SOL, as securities, a decision that will have significant implications for their regulation and trading.

Coinbase CEO Brian Armstrong has been vocal about his company’s commitment to regulatory compliance. In contrast to Binance’s legal troubles, Armstrong highlighted Coinbase’s adherence to money transmitter laws. He emphasized the importance of stability over growth during times of regulatory uncertainty and criticized the lack of clear guidelines in the U.S., which he believes drives crypto transactions offshore.

In response to the SEC’s charges, Kraken has agreed to pay a $30 million civil penalty for its crypto asset staking services. The SEC is seeking further injunctive relief, conduct-based injunctions, and disgorgement of ill-gotten gains with interest due to poor internal controls and recordkeeping issues identified since September 2018.

Meanwhile, Bittrex Global, another prominent cryptocurrency exchange, is taking preemptive measures by advising its clients to convert their U.S. dollars into euros or cryptocurrencies. This move is presumably in anticipation of potential SEC enforcement actions similar to those faced by Kraken.

The industry is eagerly awaiting a status report from the SEC by December 15. Coinbase’s push for clarity in regulations could prove to be a pivotal moment in shaping the future regulatory landscape for cryptocurrencies in the United States.

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Martin Reid

Martin Reid

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