Brian Armstrong, Coinbase CEO, is scheduled to meet with Democrats from the House of Representatives behind closed doors on Wednesday morning. This meeting comes as the cryptocurrency exchange is currently entangled in a legal dispute with the U.S. Securities and Exchange Commission (SEC).
According to Bloomberg, the meeting will involve members of the New Democrat Coalition, a caucus of over 100 Democrats who advocate for pro-economic growth, pro-innovation, and financially prudent policies. The focus of this confidential meeting will be on “digital-asset legislation and related issues, including tax, national security, privacy, and climate.”
State of U.S. Crypto Industry and Coinbase Legal Woes
Cryptocurrency regulation has recently been a topic of interest, with senators from both the House and Senate proposing various measures to provide clarity. However, given the current division within Congress, the success of these efforts remains uncertain.
Crypto companies in the United States are currently trapped in a recurring theme of unclear regulations and strict enforcement of ambiguous laws by regulators, particularly the U.S. SEC.
Recently, on June 6, 2023, the U.S. SEC SEC filed a lawsuit against Coinbase, accusing the exchange of violating federal securities legislation. In response, Coinbase disputed the SEC’s action and deemed it unlawful and an abuse of discretion.
Ripple has also been embroiled in a legal dispute with the regulator since 2020 over accusations of marketing XRP as an unregistered security.
These companies made references to the U.S. SEC’s former director William Hinman’s speech from June 2018, which, while not an official SEC judgment, presented reasons why Ethereum, and therefore many other cryptocurrencies, should not be classified as a security. Ripple and Coinbase both argued that this speech had proved that the SEC’s internal staff have doubts about the classification of cryptocurrencies as securities.
Ripple achieved a partial victory in its legal battle with the regulator on July 13, 2023, when U.S. District Judge Analisa Torres ruled that Ripple’s XRP token sale on exchanges and its utilization of algorithms did not meet the criteria for investment contracts and, therefore could not be classified as securities. However, the Judge also ruled that the sale of the token to institutional investors constitutes an illegal securities sale.
This Ripple victory is a source of optimism for Coinbase’s legal team as it begins its legal battle with the U.S. SEC.
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