The Coinbase CEO has a lot of faith in Congress in making a “clear rule book” for crypto firms to follow. But the SEC? Not so much.
United States-founded cryptocurrency exchange Coinbase has no plans to move its operations out of the U.S., CEO Brian Armstrong told investors in an Q1 earnings call.
On May 5, Armstrong assured shareholders the firm is “100% committed” to the U.S. market over the long term despite regulatory uncertainty in the U.S.
“So let me be clear, we're 100% committed to the U.S. I founded this company in the United States because I saw that rule of law prevails here. That's really important, and I'm actually really optimistic on the U.S. getting this right.”
The “optimism” alluded to by Armstrong comes from his confidence in Congress soon passing a clear set of rules for crypto firms to follow:
“When I go visit DC, there is strong bipartisan support for Congress to come in and create new legislation that would create a clear rule book in the U.S. and I think it's really important for America to get this right.”
However, Armstrong’s comments weren’t entirely “optimistic.”
The chief executive is concerned about the unpredictable enforcement action of the Securities Exchange Commission, which comes in light of the firm being served with a Wells Notice by the securities regulator in late March:
“Despite our ongoing engagement with the commission, they have not been as clear about what their specific concerns are with Coinbase as we might like, and so I have to refrain from speculating too much.”
“It's especially difficult to predict the timeline of any potential SEC litigation that we might face,” Armstrong added.
The troubles led Coinbase to file an action in a U.S. federal court seeking to compel the SEC to answer a petition that has been pending since July.
Today, to provide greater transparency in our long-standing engagement with the SEC, we are sharing our response to the Wells notice we received last month. https://t.co/aquuWmxmRM
— Coinbase ️ (@coinbase) April 27, 2023
The back and forth comes as Coinbase launched Coinbase International Exchange (CIE) on May 2, which prompted many pundits to believe that Coinbase was looking for an escape route from the U.S.
The exchange is open to customers in 30 countries worldwide, including Singapore, Hong Kong, El Salvador, Philippines, Thailand and Bermuda — where CIE is now licensed from.
Today Coinbase launched Coinbase International Exchange @CoinbaseIntExch and will begin by offering BTC & ETH perpetual futures settled in USDC with up to 5x leverage to institutional clients in eligible jurisdictions outside of the U.S.https://t.co/OzhbgJlZ2K
— Coinbase ️ (@coinbase) May 2, 2023
Related: SEC has 10 days to respond to Coinbase complaint: Legal exec
Armstrong said the European Union is “in front” in terms of regulatory progress with its Markets in Crypto Assets (MiCA) legislation set to enter into effect in mid-2024 or early 2025:
“They've adopted comprehensive crypto legislation called MiCA, creates a single clear rule book for the entire region. It's pretty powerful.”
“I just got back from a trip from the U.K. and D.C. Both of those, both have draft bills in the works that are working on things like around stable coins and market structure Singapore, Hong Kong, Australia, Brazil, all are essentially following in this direction,” Armstrong added.
The CEO’s remarks come as Coinbase managed to increase its revenue 22% and slashed its net income loss over $475 million to $79 million in Q1.
Our Q1'23 financial results are in and our letter to shareholders can be found on the Investor Relations website at https://t.co/8ovHEtPRgf pic.twitter.com/4iWAPGZNMh
— Coinbase ️ (@coinbase) May 4, 2023
Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?
