On June 6, the United States Securities and Exchange Commission (SEC) charged Coinbase for operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency. It also charged Coinbase with failing to register the offer and sale of its crypto asset staking-as-a-service program. Why it matters: According to the SEC, by not registering itself with the regulator, Coinbase has deprived its customer base of significant protections, including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest, among others. The SEC seems to be tightening its regulatory control over crypto exchanges. The case against Coinbase comes only a day after the SEC sued Binance for allegedly misleading its customers. The SEC had a very similar complaint against Binance as well, saying that it should have registered itself as an exchange, broker-dealer and clearing agency. It is important to point out here that according to the SEC, Binance and Coinbase have been performing these functions (that of an exchange, broker-dealer, etc.) since 2017 and 2019, respectively. This leaves one wondering if regulatory action was to take place, why was it not done earlier? SEC’s complaints against Coinbase: The SEC says that since 2019, Coinbase has made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities. It further mentions that Coinbase failed to register its offers and sales of this staking program, which it says deprives customers of critical disclosures and other protections. It alleges that “Coinbase was fully aware of the applicability of…
