Brian Armstrong, CEO of Coinbase, has openly criticized the U.S. Securities and Exchange Commission (SEC) over its inconsistent stance on digital assets, calling for a new approach.
He believes that the next SEC chairperson should dismiss what he considers unnecessary cases against cryptocurrency companies and issue a public apology to the American people. Armstrong suggested that such a move, while not reversing the damage caused by past actions, could begin to restore trust in the SEC.
Armstrong’s statement follows years of fluctuating SEC positions on how to classify and regulate digital assets, particularly as the agency’s views have varied on whether digital assets should be considered securities.
In 2018, the SEC stated that digital assets were not securities, a position that provided a clear distinction for the crypto industry. However, this interpretation changed in 2021 when the SEC suggested that a digital asset could represent an investment contract, meaning it might fall under securities regulations if it embodies certain investment qualities.
Then, in 2024, the agency referred to digital assets as simply “computer code,” yet also described these assets as items that might represent investment contracts under certain conditions.
Later that same year, the SEC added further complexity by stating that a digital asset itself is not necessarily a security, blurring the lines even more about what does or does not make a digital asset fall under securities laws.
Similarly, the SEC’s stance on specific digital assets and regulatory jurisdiction has shifted over time, leading to more uncertainty. In 2023, the SEC clarified that it had never officially categorized Bitcoin as a security.
This distinction has always been important in the crypto world, as Bitcoin’s status influences the regulation and classification of other digital assets. Additionally, in 2021, the SEC commented that there was no specific regulator for cryptocurrency exchanges, indicating the absence of a well-defined framework for overseeing these platforms.
Just a year later, in 2022, the SEC claimed that Congress had given it a broad legal structure to regulate exchanges, introducing a new perspective on the SEC’s role in the crypto exchange market.
These ongoing changes have left many in the industry confused about which regulations apply and how the SEC views digital assets in general.
Adding to the uncertainty, in 2020, the SEC acknowledged that there was no definite answer as to whether digital assets were securities.
Despite this statement, in 2023, the agency insisted that it had a clear regulatory framework for securities dating back 90 years, suggesting that this long-standing structure could also be applied to digital assets.
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For many, including Armstrong, these shifting interpretations reflect a lack of consistency that undermines trust in the agency’s guidance and enforcement actions.
Coinbase versus the SEC
Coinbase, under Armstrong’s leadership, has not only observed these evolving statements but has also been directly affected by the SEC’s actions. Coinbase has faced several legal challenges initiated by the SEC as it has worked to expand and legitimize its offerings in the U.S. cryptocurrency market.
In June 2023, the SEC filed a lawsuit against Coinbase, accusing it of operating as an unregistered securities exchange, broker, and clearing agency. The SEC alleged that Coinbase facilitated the trading of assets considered unregistered securities, despite the lack of clear regulatory guidance on which digital assets qualify as securities.
In its defense, Coinbase has argued that the SEC had given it initial approval to go public in 2021, suggesting the agency was aware of and implicitly accepted its business model at that time. Coinbase further claims that the SEC has provided limited guidance on how it expects exchanges like Coinbase to comply with existing securities regulations.
Additionally, Coinbase has countersued the SEC, asking the agency to clarify the rules regarding digital assets and the operation of cryptocurrency exchanges. This legal move demonstrates Coinbase’s frustration with the lack of clarity and consistency from the SEC, which the company believes has hindered its ability to operate lawfully.
