Imagine this: It’s November 2018. The crypto trading platform EtherDelta, bustling with traders buying and selling digital tokens known as ERC20 tokens, is hit with a shock. The U.S. Securities and Exchange Commission (SEC) slaps EtherDelta with charges for operating without their approval.
In November 2018, the SEC closed EtherDelta. The SEC argued that the ERC20 tokens were securities from ICOs without naming any certain asset at all. Despite $25 million daily trading volume the exchange’s operators were penalized with less than $400k. How can the same… pic.twitter.com/MgRaWCR6ld
— Mr. Huber🔥🦅🔥 (@Leerzeit) June 14, 2023
Why? Well, the SEC argued that these ERC20 tokens are securities and so, trading them should be regulated just like the stock market. It needs to be registered. EtherDelta, which was doing a roaring trade—$25 million every day—was penalized with a fine of less than $400k. Not a small amount, but when compared to their daily volume, it was like a speeding ticket to a Formula 1 racer.
Coinbase: The Plot Thickens
Fast forward to 2023. The SEC, not one to back down from a fight, turns its gaze to Coinbase—one of the biggest crypto exchanges in the world. Now, this is a different ball game. Coinbase isn’t just any crypto platform; it’s a publicly-traded company, with its shares bought and sold on the stock market.
The SEC accuses Coinbase of the same violation as EtherDelta—trading crypto assets that should have been registered as securities. The drama intensifies as Coinbase squares up against the SEC, claiming that many tokens are more like commodities (think gold or oil), not securities.
The SEC’s Stance and the Crypto Industry’s Response
Under the leadership of Gary Gensler, the SEC is playing hardball. They’re telling the crypto world: “If you’re playing in our backyard, you need to follow our rules.” And while the legal battles may take years, the message is loud and clear.
But here’s the thing: the crypto world isn’t backing down. Coinbase, Binance and others are standing up to the SEC, asking for clear rules. As tension grows, some companies like Coinbase are even considering packing up and moving headquarters to places with friendlier rules for crypto.
No matter the hurdles, from EtherDelta to Coinbase, the world of crypto isn’t backing down. It’s a future shaped by new ideas and rules, and that story is far from over.!