In a move that is sending shockwaves through the crypto industry, Coinbase CEO Brian Armstrong announces that unless regulatory frameworks change in the United States, Coinbase and all of its affiliates will be leaving the 50-state republic that was once touted as being the leader in cryptocurrencies.
Armstrong’s comments, which highlighted the ongoing struggle for regulatory clarity in the United States, indicated that all options were being considered, even relocating to a country like Britain that has more favorable regulators. the environment can provide.
Is the SEC After Coinbase?
The comments come amid a series of regulatory developments involving Coinbase, such as the company’s recent run-in with the Securities and Exchange Commission (SEC).
The SEC issued a Wells Notice to Coinbase, a formal warning that the agency may take legal action regarding various cryptocurrencies and producers (such as Coinbase Wallet and Coinbase Earn).
The crypto giant said that its services would continue to operate as usual despite regulatory pressure (in other words, business as usual until the SEC comes knocking on the doors).
On Monday, the SEC announced an enforcement action against Bittrex exchange and John Reed Stark, a former official of the agency.
The potential relocation of Coinbase’s headquarters could have profound implications for both the company and the US cryptocurrency market. As one of the largest and most influential exchanges, Coinbase has been instrumental in driving digital currency adoption in the United States.
What Will This Departure Mean for Other Countries?
A possible departure could allow countries with more progressive and transparent regulatory frameworks, like the UK and the Bahamas, to take the lead.
In fact, on April 19, Coinbase announced that it received a regulatory license to operate from the Bermuda Monetary Authority. The move was part of a drive to update the firm’s “global scale to go broad and deep.” aka, get as far away from the SEC as possible.
Coinbase stated that Bermuda was one of the first financial centers to pass comprehensive digital assets regulation in 2018. “Its regulatory environment is long known for a high level of rigor, transparency, compliance, and cooperation,” it added.
Coinbase said it selected Bermuda because the BMA is a highly respected and experienced financial regulator. It added that it was also a member of several international organizations.
Speaking at the Fintech Week in London earlier this week, CEO Brian Armstrong aired his frustrations at the current situation. Regarding a potential relocation, he said,
“Anything is on the table, including relocating or whatever is necessary.”
“I think if a number of years go by where we don’t see regulatory clarity emerge in the US, we may have to consider investing more in other regions of the world.”
Furthermore, he hailed the UK for “moving fast on sensible crypto regulation.” However, Britain’s banks have other ideas and continue to impose obstructions on crypto companies.
In early March, Armstrong echoed the sentiment from the crypto sector. He warned that there would be an exodus of innovation and talent if the SEC contuses to carpet bomb the industry. (Armstrong is onto something here).
Is America’s Loss Bermuda’s Gain?
This week, Coinbase plans to launch an offshore derivatives exchange in Bermuda as soon as next week. It added that launching an offshore exchange in Bermuda would enable Coinbase to compete with Binance.
“You don’t have this unfortunate thing happening where the CFTC and the SEC are having a turf battle. We actually have contradictory statements from the heads of the CFTC and the SEC coming out almost every few weeks—how’s a business going to operate in that environment?
We just want a clear rulebook.”