We learned last night that the U.S. Securities and Exchange Commission served Coinbase with a Wells notice, a prelude to taking enforcement action against the U.S. crypto giant over potential “violations of the federal securities laws.” The company intends to put up a fight, according to its CEO.
Separately, the CEO of TikTok, Shou Zi Chew, is expected to testify in front of Congress this morning. The stakes for the social media service are high. The app has engendered concerns across the U.S. political spectrum, including allegations concerning data security, user privacy and potential meddling by a foreign government.
The Biden administration wants the app’s parent company to sell it so that TikTok can have ownership in a different country under a different code of law. The Chinese Communist Party doesn’t want it to sell. Chew is stuck in the middle.
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That well-known tech products are in regulatory crosshairs should not surprise.
The aggregated value of crypto assets is north of $1 trillion, lots of consumers are involved and Coinbase is a leading company in a market that has evolved faster than its regulatory oversight.
TikTok is incredibly popular in the United States but suffers from sour relations between China, where its parent company is based, and the U.S. economy that generates a large chunk of its revenue. Even worse for TikTok, it has, at a minimum, operated in a manner in the past that has directly undercut its ability to claim that it is benign.
It strikes me how distinct in substance the Coinbase and TikTok matters are and also in how we should feel about them. In case you are in a hurry, TikTok has failed to earn the sort of trust it requires to operate in its current form and should not be allowed to continue to do so. Coinbase, in contrast, is a far more sympathetic company to consider. Let’s talk about it. (To be clear, this is my thinking out loud about these issues, not my speaking for TechCrunch as a whole.)