A major cryptocurrency exchange, Coinbase, is formally pushing U.S. regulators to reconsider rules that bar Securities and Exchange Commission (SEC) personnel from owning or transacting in most digital assets.
In an April 22 communication, Coinbase’s Chief Legal Officer, Paul Grewal, contacted both SEC Chair Paul Atkins and the U.S. Office of Government Ethics (OGE). The core argument: the existing restrictions impede regulators’ capacity to grasp and effectively oversee the burgeoning crypto industry.
Policy Seen as Hurdle to Informed Oversight
Coinbase contends the prohibition is particularly ill-timed. Grewal highlighted a presidential directive tasking the SEC and other bodies with formulating regulatory proposals within 180 days to bolster America’s standing in digital finance.
With nearly half that period elapsed, Grewal noted the paradox of agency staff being unable to directly engage with the very technology central to their regulatory mandate. He emphasized that genuine understanding often comes from direct use.
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This lack of firsthand experience, Coinbase argues, directly hampers the SEC Crypto Task Force’s mission to clarify the regulatory landscape for digital assets. The firm advocates for the OGE to withdraw and revise Legal Advisory 22-04, which underpins the current ban on staff crypto involvement.
Addressing Chair Atkins, Grewal proposed concrete steps. Granting waivers to Crypto Task Force members and other key personnel involved in crypto matters was suggested as a practical measure, aligning with practices in similar advisory contexts.
This approach, Grewal stated, would empower staff responsible for shaping crypto rules to gain essential hands-on knowledge of the underlying blockchain technology and its applications.
Coinbase also advocates for a more refined strategy regarding potential conflicts of interest. Instead of a complete ban, the exchange suggests permitting SEC staff ownership under defined parameters, noting that much crypto activity falls outside traditional securities definitions.
Alternatively, the Commission could specify that holding certain crypto assets wouldn’t inherently create a conflict due to negligible impact on their value. Grewal pointed out this aligns with the Office of the Inspector General’s perspective on the need for regulators to adapt their expertise and tools to the evolving market, a key point in wider ongoing crypto regulation debates. This move comes amidst broader discussions around crypto regulation overhaul.