Custody services, as well as client borrowing and lending, are common on cryptocurrency exchanges, a practice that the SEC does not permit. Just a few weeks before the SEC filed suit against the biggest cryptocurrency exchange, the CFTC did so in March of the same year. The SEC argued that since Coinbase offered 13 cryptocurrencies, most of which were not actively traded, the exchange was subject to SEC jurisdiction because it was engaging in the business of selling securities. 

The SEC regulates stocks, bonds, and other conventional financial instruments, but whether or not crypto tokens should be subject to the same level of oversight is still up for dispute among US authorities. The SEC's adoption of this approach in its efforts to regulate the sector is signaled by the advice to Coinbase. It's possible that the majority of American crypto firms would be breaking regulations unless they filed with the Securities and Exchange Commission if Coinbase had consented. The SEC did not provide any commentary on how the agreement regarding Coinbase removing any tokens other than Bitcoin will affect the rest of the sector.

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