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Coinbase's Aggressive Anti-SEC Rhetoric is Paying Off

Coinbase wins regulatory approval, BIS trials cross-border wholesale CBDCs, DFINITY launches ICP Asia Alliance, Gemini defends $282m withdrawal, and Ripple drops Fortress

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To put it lightly, Coinbase and the US Securities and Exchange Commission (SEC) have been at loggerheads over the past few months. As the SEC attempts to regulate the Wild West, its overbearing approach has rubbed industry leaders the wrong way. From debating whether cryptos are securities to declaring that the entirety Ethereum falls under US jurisdiction, regulators are bottling the job.

Coinbase has found itself in the cross hairs of the SEC, facing a lawsuit from the regulator for operating as an "unregistered securities exchange, broker, and clearing agency."

But the crypto exchange has not taken the allegations lying down. Coinbase CEO Brian Armstrong hit back at the lawsuit, stating it was a reflection of the SEC's "misguided and conscious refusal" to offer clarity to the crypto industry.

Armstrong also called out the SEC for its "really sketchy behaviour" and suggested it "would certainly help" if Gary Gensler stepped down as SEC chair.

“There’s kind of a lone crusade, if you will, with Gary Gensler, the chair there, and he has taken a more anti-crypto view for some reason,” he said.

“I don’t think he’s necessarily trying to regulate the industry as much as maybe curtail it. But he’s created some lawsuits, and I think it’s quite unhelpful for the industry in the U.S. writ large, but it also is an opportunity for Coinbase to go get that clarity from the courts that we feel will really benefit the crypto industry and also the U.S. more broadly.”

New hub?

Armstrong even went as far as to say that Coinbase is considering a USA exit on account of the SEC. "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," he said.

Coinbase doesn't appear to be bluffing either. The exchange is reportedly deliberating on a central European hub, with a decision to be made in a matter of weeks. New European crypto regulation, MiCA, allows firms to access the European market by obtaining a license from one member state.

Additionally, Coinbase International Exchange has obtained regulatory approval from the Bermuda Monetary Authority (BMA) to offer perpetual futures trading to customers outside the US. The approval will allow the world's second-largest crypto exchange to access 75% of the global cryptocurrency trade, which is accounted for by derivatives trading accounts.

According to Coinbase, perpetual futures are "designed to trade close to the underlying asset price, do not expire or settle and can be held indefinitely. Futures contracts are priced based on the forward-looking market price of an underlying asset, have a specific expiration date and can be settled physically or financially."

Coinbase's unfiltered criticism of the SEC seems to result in other regulators turning up their ears. Whilst the US is Coinbase's home market, international regulators are welcoming Coinbase, offering solutions that the SEC is not prepared to consider. In turn, Coinbase's future could be global sooner than expected.

Binance, which is also facing lawsuits from the SEC, has taken a more muted approach. Consequently, the world's largest exchange is not exactly making headway in international markets. That's not to say that Armstrong's vocal criticism necessarily guaranteed Coinbase's approval outside of the US, but his brash approach compared to Changpeng Zhao's seems to be netting results.

Should We Be Worried About Binance?
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  • BIS and Central Banks Dive into Cross-Border CBDCs: The Bank for International Settlements (BIS) and a consortium of central banks, including Singapore, have successfully trialled cross-border wholesale CBDCs "using new decentralised finance (DeFi) technology concepts on a public blockchain," according to an MAS announcement on Thursday. This move could be a game-changer for international transactions. While the traditional SWIFT system has been the go-to for years, this collaboration hints at a future where digital currencies streamline cross-border payments.
  • DFINITY's Ambitious Web3 Drive in Asia: DFINITY Foundation isn't just dipping its toes in the Asian tech waters; it's diving in headfirst. The company behind the Internet Computer (ICP) blockchain has launched the ICP Asia Alliance and is backing it with a whopping $20 million. The goal is clear: supercharge Web3 adoption across Asia. DFINITY cited the "growing trend of web3 and blockchain companies relocating or expanding their operations to Asia, establishing the region as a global hub for web3 and blockchain innovation." It has opened a number of "ICP Hubs" in Asia since the beginning of the year, including in Hong Kong, India, Malaysia, Philippines, South Korea, Indonesia, and Singapore.
  • Gemini and the $282 Million Withdrawal Saga: Gemini has been quick to debunk claims about a mysterious $282 million withdrawal last August from Genesis, labelling them as "pure fantasy" and setting the record straight that the money was not Gemini corporate funds or the personal funds of its co-founders or their investment firm. The New York Post claimed on Wednesday that Gemini co-founders Cameron and Tyler Winklevoss “secretly withdrew” the funds months before the exchange suspended customer withdrawals and left Gemini Earn customers with frozen funds. "The Post is a tabloid — not a serious financial publication — and clearly willing to launder the lies of Barry Silbert and DCG in exchange for clicks, even if it means deceiving their readership," Gemini said.
  • Ripple & Fortress: The Acquisition That Wasn't: The crypto corridors are abuzz with Ripple's decision to back out of an acquisition deal with crypto custodian Fortress. Such high-profile negotiations always draw attention, but a sudden change of heart? That's bound to raise eyebrows. The CEO of Fortress, in response to this sudden change, expressed his surprise and disappointment. He hinted at prior mutual agreements and understandings that were seemingly disregarded. The exact reasons behind Ripple's decision remain under wraps, but it's evident that such high-profile deals come with their share of complexities and challenges.