Coinbase allegedly allowed unregistered securities on its platform. Has its plan to dominate the US crypto market backfired?
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Coinbase’s general counsel has said the US lacks a clear or workable regulatory framework for digital asset securities
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“There’s a very strong possibility, in my professional opinion, that a lot of the things on Coinbase are investment contracts,” lawyer Preston Byrne told Blockworks
Coinbase has a problem. US regulators are reportedly investigating whether it’s masquerading as an unregistered securities exchange — enabling trade of digital assets that fall under the jurisdiction of the SEC.
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Coinbase made a business decision to gain maximum market share by listing as many tokens as possible in the United States, according to Preston Byrne, partner at New York law firm Anderson Kill.
More than 150 cryptocurrencies are available to US traders, so when Coinbase says it doesn’t list any securities on its platform, it may simply be playing cute with its language, Byrne alluded.
“A token isn’t a security. It’s an investment contract, which is regulated by the Securities Act in exactly the same manner as securities,” Byrne explained.
“There’s a very strong possibility, in my professional opinion, that a lot of the things on Coinbase are investment contracts,” he added.
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