The U.S. cryptocurrency industry is currently facing multiple federal investigations, enforcement actions, and charges against various crypto companies, celebrities, and entrepreneurs, which could potentially put most of crypto out of business in the U.S. The Securities and Exchange Commission (SEC) recently issued a "Wells notice" to Coinbase Global, which has been a rallying cry for the industry. Industry executives and lawyers have likened SEC Chair Gary Gensler to the rising mob boss in The Godfather, with one commentator describing him as "Gary G going Michael Corleone Baptism scene" in an internal chat channel at the Blockchain Association trade group.

The SEC's allegations against Coinbase that it facilitates trading in unregistered securities are particularly concerning for the industry. This claim could be fatal to Coinbase's core business if it is proven in court. However, Coinbase is not the only crypto company facing regulatory pressure. The world's largest crypto exchange, Binance, is facing a series of allegations by federal authorities over its conduct, with the latest accusation coming from the Commodity Futures Trading Commission (CFTC) accusing Binance of allowing illegal derivatives trading and helping U.S. customers circumvent its compliance controls.

Kara Calvert, head of U.S. policy at Coinbase, argues that "the regulatory environment is creating a real threat to both our economic and national security." If the environment does not improve, much of the industry may shift overseas. If the SEC succeeds in shutting down trading of most tokens in the U.S., it could force Coinbase and other platforms to register with the SEC as brokerages and exchanges. Issuers would also need to register tokens as securities. The industry has long claimed that tokens are not securities under prevailing legal standards and cannot register under the regulatory framework used for stocks and other securities.

Coinbase is gearing up for battle, and its executives are asking supporters to join a grassroots campaign called Crypto 435 to pressure politicians in every congressional district. However, legal experts say that the SEC is unlikely to back down, and a legal resolution could take years. If the SEC files a lawsuit, it would be a challenging day for the industry, and investors should prepare for it, warns Matt Hougan, chief investment officer of Bitwise Asset Management.

Hougan believes that Coinbase's fight could eventually benefit the industry by defining how brokers, custodians, and institutional investors should handle tokens. In the meantime, the industry is bracing for a long battle with regulators that could ultimately decide the future of crypto in the U.S.