The Best- and Worst-Case Scenarios for Coinbase

The Securities and Exchange Commission’s lawsuit against Coinbase today, alleging a wide range of securities violations, kicks off what will likely be a yearslong legal battle that holds the key to Coinbase’s future. If the SEC wins, it will be all but impossible for the crypto giant to do business in the U.S.

The SEC alleges that Coinbase has been operating an unregistered securities exchange, broker and clearinghouse, and combining those functions into one platform. To register with the regulator, Coinbase would likely have to separate those operations, mirroring the structure of traditional financial services. The crypto exchange has argued that it’s impractical or even impossible for crypto firms to do so, because blockchain technology has made these kinds of financial intermediaries irrelevant.