Coinbase boss Brian Armstrong says SEC lawsuit ‘unhelpful’

“It’s totally appropriate and necessary for regulators to go after bad actors in the space,” Mr Armstrong said.

“Just like you might see Bernie Madoff or Enron happen occasionally, it’s important to recognise that it’s not representative of the whole industry, which needs clear rules so that there’s a level playing field and consumers are protected.”

Mr Armstrong welcomed the Australian government’s move to install a licensing regime for crypto exchanges. Coinbase intends to seek an Australian financial services license once there is more clarity on the proposed licensing regime.

“We certainly look for countries that are taking steps in tackling that one we just saw this morning,” Mr Armstrong said. “I can’t say enough good things about it.”

The SEC’s action against Coinbase is viewed by some as existential for the future of crypto, with the sector accusing the agency of regulating by enforcement without new laws from the US Congress.

Coinbase, which listed on the Nasdaq in April 2021 and now has a market capitalisation of $US18.4 billion ($28.7 billion), has argued the SEC lacks authority to police the space because many digital assets are not securities.

Mr Armstrong said staking – a way of individuals receiving payment for securing a blockchain – was a new technology that needed new laws.

“We don’t believe it should be a regulated security, and we’re pursuing clarity through the courts with that.”

Australian regulators have also started to test local licensing laws, bringing three lawsuits against crypto start-ups over the last 12 months and alleging they have operated without appropriate licensing.

Mr Armstrong said Australia remained a key focus for the global exchange, but acknowledged there were other jurisdictions around the world – like Hong Kong and Singapore – that were rolling out concrete laws for crypto exchanges.

“We’re prioritising our investments around the world based on where we see regulatory clarity,” Mr Armstrong said,

“We’ve found the [Australian] regulators to be very amenable and willing to work with us. My hope is that they prioritise regulatory clarity like we’re seeing from the rest of the G20.”

Central banks around the world are also exploring how crypto technology could better help them manage the money supply and have visibility over their jurisdictions.

The Reserve Bank of Australia has conducted a pilot program to test the tokenisation of real-world assets and experimented with a cryptocurrency pegged to the Australian dollar.

Earlier this year, the pilot program executed an instant foreign exchange settlement using an eAUD and other programs around livestock auctions and carbon asset trading are under way.

But a debate remains around whether central banks might issue a central bank digital currency or whether private banks themselves should.

China remains a global outlier, testing a digital yuan as far back as 2020. The world’s second-largest economy has received criticism for the “programmable” nature of its digital currency, which could be used to control its population.

“There is a risk of the digital yuan becoming more ubiquitous because it allows China to create a surveillance state and project soft power out there into the world,” Mr Armstrong said.

“For countries that want to see their currency and their values flourish in the global economy, it’s probably important for them to find a private market solution that they can regulate or do it themselves.”

Correction: Coinbase intends to seek an AFSL. An earlier version of this story incorrectly said Coinbase has an application for an AFSL underway.