Cryptocurrency Twitter finds a common enemy in the SEC, but some see just reward after Coinbase’s delisting of XRP.

In Brief.

  • The U.S. Securities and Exchange Commission issued a “Wells Notice” to Coinbase for offering unregistered staking rewards, which has sparked debate over the regulatory stance toward cryptocurrencies in the United States.
  • Some members of the cryptocurrency community have expressed solidarity with Coinbase, while others criticized it.
  • Andreessen Horowitz’s Chris Dixon hopes the U.S. will take a more constructive approach to engage with innovators while protecting consumers.

News of the U.S. Securities and Exchange Commission’s action against Coinbase, the country’s leading cryptocurrency exchange platform, spread like wildfire among the cryptocurrency community, sparking an existential debate about what it could mean for the industry in the United States.

“It should be clear by now that the Biden Administration wants all cryptocurrencies – even legitimate ones – out of the U.S.,” tweeted Caitlin Long, founder and CEO of Custodia Bank. “See also yesterday’s White House economic report, which lambasted all financial innovation while extolling the “stability” of traditional banks.”

Long and others questioned the SEC’s sudden delivery of a so-called “Wells Notice” after it allowed Coinbase, a publicly traded company, to offer staking rewards for several years and is only now threatening to sue Coinbase over claims of offering unregistered securities.

“In the past 9 months, [Coinbase] has met with the SEC over 30 times, sharing details of our business to build a path to registration,” wrote Paul Grewal, Coinbase’s chief legal officer. “During this time, the SEC has given basically 0 comments on what to change, or how to register. Instead, today we received a Wells notice.”

A Wells notice is a notice from the SEC informing a company that the agency intends to bring a legal enforcement action against them.

“From day one, @coinbase has invested heavily in fully complying with U.S. laws, even when it forced them to move more slowly or lose a competitive advantage to other exchanges that chose to take shortcuts,” wrote Chris Dixon, general partner at Andreessen Horowitz.

“The U.S. has a strong track record of encouraging innovation, and regulators have played a key role by setting clear rules and going after bad actors,” Dixon continued. “We hope the U.S. will take a more constructive approach to engaging with innovators while protecting consumers.”

Many expressed solidarity with Coinbase, with Adam Cochran, founder of Cinneamhain Ventures (CEHV), saying he will “vote with my wallet” and become a customer, should Coinbase strike back against the agency.

While many were quick to complain to the SEC, others took the opportunity to criticize the company, including many members of the XRP community who were still smarting from Coinbase removing XRP from Coinbase Wallet last fall.

Ripple Labs has been in an ongoing court battle with the SEC since December 2020, when the agency accused the company, whose founders launched XRP in June 2012, of misleading investors and raising $1.3 billion in unregistered securities.

“I doubt I’ll ever understand how the SEC can sign off on @coinbase going public and then raise all these issues afterwards,” tweeted attorney Bill Morgan. “Forget just cryptocurrencies, how does the SEC protect Coinbase shareholders with this appalling conduct?”.

https://twitter.com/Kaschman14/status/1638672904278925312

 

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