SEC was the only regulator unwilling to meet with Coinbase: Brian Armstrong

Published at: Sept. 24, 2021

Coinbase CEO Brian Armstrong claims that the United States Securities and Exchange Commission is the only government branch that is unwilling to meet with the firm.

Speaking on Anthony Pompliano’s Best Business Show on Friday, Armstrong said that during his visit to Washington after Coinbase went public in April, the SEC was the “only regulator” that refused to meet with him:

“I reached out to the SEC. I tried to get a meeting with them. They told me that they weren’t meeting with any crypto companies.”

“I was kind of surprised by that because there are so many different regulators out there. Every single one has been willing to meet with us and every other branch of government,” he added.

Armstrong highlighted his firm’s issues with the SEC’s approach earlier this month when he revealed the enforcement body had threatened to sue the firm if it launched its USD Coin (USDC) lending program that offered 4% annual yields. Despite other firms already offering similar services, he said the SEC refused to give the green light as it deemed the program to be a security but provided no explanation on how it came to that conclusion.

During the interview with Pompliano, the Coinbase CEO noted that the SEC has not changed its tune since then, and he said it hadn’t even placed a phone call to the firm. Armstrong asked:

“How are they protecting consumers in this case? I think a lot of consumers demonstrably have wanted to earn higher yields on their savings accounts. They’re not really getting those products from the existing financial services.”

“So, that was one open question. And then the second one was, ‘How are they creating a level playing field?’” he added.

Armstrong said Coinbase had considered taking the SEC to court but decided that it was not worth a lengthy legal battle, not least because “there’s a lot of deference given to regulators in the court system.”

The firm has now walked back its plans to launch the program and will instead sit on the sidelines until the regulatory landscape around crypto lending services become more transparent:

“We’re going to wait and see what the SEC does in terms of the other products that are out there already in the market where it’s not a level playing field today.”

“I think we want to also just focus our efforts on maybe even more important things happening in crypto, like the questions around which of these tokens are securities and how is DeFi [decentralized finance] going to be used?” he added.

Crypto goes to Washington

On the subject of how policymakers view crypto, Armstrong said there’s a 50/50 split in Washington between people who think it’s risky and people who see the opportunity the sector provides:

“You know, 50% of the people I talked to in D.C., roughly, they’re still thinking of crypto as a risk. They think this is scary. This is dangerous. They have all kinds of misconceptions in their head about the percentage of activity that’s for illicit activity.”

“So, that’s probably half the people I meet in D.C., and the other half, they realize that this is actually a huge opportunity,” he added.

Armstrong also appeared at the TechCrunch Disrupt conference on Wednesday and revealed that Coinbase is preparing a draft regulatory framework that it will put forward to U.S. lawmakers next month. The firm is hoping to be an “advisor” that can advocate for “sensible regulation,” with Armstrong noting that regulators have asked the firm multiple times for a crypto proposal.