Coinbase CEO on its Wells Notice: SEC is like soccer referees in a game of pickleball

Brian Armstrong, the CEO and co-founder of crypto exchange Coinbase has compared the Securities and Exchange Commission (SEC) to “soccer refs” in a game of pickleball, criticizing U.S. regulators for not being able to “agree on the rules” of “this new game.”

The comments came after Armstrong revealed that his firm had been issued a Wells Notice on March 22 — which he had noted “typically precedes an enforcement action.”

1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.

— Brian Armstrong (@brian_armstrong) March 22, 2023

The Coinbase CEO has been critical about the seeming lack of clarity from United States regulators around crypto regulation. There has also been an ongoing debate on who should be the primary body regulating crypto.

Asked to explain the most recent development “in NFL terms,” Armstrong quipped:

“Imagine you’ve got both football and soccer refs on the field, but we’re actually playing pickleball (fastest growing new sport in America). The refs can’t really agree on the rules of this new game, and one of them decides to change a call they made back in April 2021.”

The reference to a “call they made back in April 2021” refers to the SEC’s approval of Coinbase’s application to go public in 2021. Armstrong argued that the SEC that its filings “clearly explained” its asset listing process and “included 57 references to staking.”

In a separate tweet, Coinbase Chief Legal Officer Paul Grewal claimed the SEC provided “no clear rule book” on crypto regulations and that “efforts to engage with the SEC are met with silence or enforcement actions.”

The truth is that today there is no clear rule book from the SEC on crypto, and efforts to engage with the SEC are met with silence or enforcement actions. They have not followed a good faith rulemaking process with industry, as required under the APA. 10/15

— paulgrewal.eth (@iampaulgrewal) March 22, 2023

Both executives appear to welcome the chance to use the “legal process” to provide the crypto industry with regulatory clarity.

“We are proud to stand up for our customers and the industry in these moments,” said Armstrong.

“Going forward the legal process will provide an open and public forum before an unbiased body where we will be able to make clear for all to see that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on digital assets.”

While other firms like Kraken reached a settlement with the SEC that required it to stop offering staking services to U.S. customers, Armstrong has repeatedly asserted that Coinbase’s staking services are not securities and that the firm would be happy to defend this position in court if required.

The crypto community has widely condemned the recent notice, with many agreeing that the SEC has reversed its earlier position regarding Coinbase.

Sums it up https://t.co/tw64h9EE32

— John E Deaton (@JohnEDeaton1) March 23, 2023

Many have also thrown their support behind Coinbase, also seeming to agree that Coinbase would be fighting on behalf of the entire U.S. crypto industry as an unclear regulatory environment drives activity offshore.

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