- Coinbase is urging the U.S. Office of Government Ethics to lift a rule preventing SEC staff from holding cryptocurrencies, arguing it hinders their ability to regulate effectively.
- The company believes that firsthand experience with crypto is essential for developing sound regulatory frameworks.
In a move aimed at bridging the gap between crypto regulation and real-world experience, Coinbase is urging the U.S. Office of Government Ethics (OGE) to lift the restriction preventing Securities and Exchange Commission (SEC) staff from holding cryptocurrencies. This push, led by Coinbase’s chief legal officer Paul Grewal, argues that a deep understanding of the technology is crucial for the development of effective regulatory frameworks for digital assets.
In an open letter sent to OGE acting director Jamieson Greer and newly appointed SEC Chair Paul Atkins, Grewal made a compelling case that regulating technology requires firsthand knowledge of how it operates. “To regulate technology, you need to understand it. To understand technology, you need to use it,” Grewal emphasized. He contended that allowing SEC staff to engage with crypto would equip them with the insights necessary to craft regulations that support the burgeoning digital securities market.
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The current rule, outlined in a 2022 legal advisory, prohibits SEC staff from buying, selling, or using cryptocurrencies, as they don’t qualify as “publicly traded securities” under the OGE’s guidelines. This policy has drawn criticism, particularly from those like Grewal, who argue that without direct experience, regulators are at a disadvantage when trying to address the complexities of digital assets.
Grewal’s appeal comes at a time when the SEC’s Crypto Task Force is working on shaping the future of crypto regulation. He believes that the lack of crypto experience among staff is a significant obstacle to the task force’s efforts. He further suggested that waivers could be issued to members of the task force to allow them to use crypto in order to evaluate its underlying technology—a move that would align with similar actions taken in other advisory situations.
The call for change reflects a growing push within the industry for regulators to embrace crypto not just as a financial asset but as a critical area of innovation. With regulatory clarity still elusive, Coinbase’s request could help pave the way for more informed, effective policies that support the evolution of digital finance.
This conversation highlights the ongoing tension between crypto companies and regulators, as both sides struggle to find common ground on how to balance innovation with consumer protection in the rapidly evolving world of digital assets.
