Coinbase's Grewal Urges SEC to Lift Crypto Ban on Employees for Better Regulation

Coinbase’s chief legal officer, Paul Grewal, has called for significant changes in the U.S. Securities and Exchange Commission’s (SEC) approach to regulating cryptocurrencies. Grewal has urged the U.S. Office of Government Ethics to lift the ban on SEC employees holding digital assets, arguing that practical experience with crypto is crucial for developing fair and effective regulations. He emphasized that the Trump administration's push for rapid crypto rulemaking highlights the urgency of this issue.

Grewal posted letters to the Office of Government Ethics and the SEC Chair, arguing that SEC employees need permission to own and use cryptocurrencies to better understand their regulation. He insisted that proper regulation requires firsthand knowledge of digital assets, stating that sensible SEC frameworks need staff to experience how digital assets function in real scenarios. Grewal also highlighted the contrast between permitted stock and bond holdings and the banned crypto, which he believes causes key knowledge gaps as digital assets become more central to the financial landscape.

Grewal’s appeal includes issuing ethics waivers to knowledgeable staff, allowing them to engage with crypto products and core technologies. He believes that real comprehension demands more than second-hand research and that hands-on engagement with crypto is essential for informed oversight. Effective regulation, he argues, requires practical experience to keep pace with this fast-evolving sector.

Some experts in finance and crypto deem the SEC crypto ban on agency staff excessive and misaligned. They compare it to forbidding Federal Reserve staff from holding U.S. dollars, warning that such strict rules disconnect regulators from the technology they oversee. Even supporters of ethical safeguards agree that hands-on knowledge is essential for effective regulation. This debate mirrors broader discussions on regulatory familiarity with emerging technologies.

Advocates of the SEC crypto ban argue that it prevents conflicts of interest, insider trading, and other serious ethical risks. They contend that regulators require firm boundaries to maintain public trust in digital asset oversight. However, the shifting landscape could prompt the Office of Government Ethics to rescind this rule. Other federal agencies have already rolled back anti-crypto policies in recent months, notably the Federal Reserve, which withdrew its guidance requiring banks to seek approval for crypto services. This aligns with Grewal’s beliefs and the stance of the new SEC Chair.

The United States needs fair crypto rules supported by deep SEC expertise. Grewal argues that regulators must first learn what they regulate. He suggests ditching outdated ethics guidelines and issuing targeted exemptions to avoid an SEC crypto ban. Quick action is essential because the crypto industry evolves rapidly. Meanwhile, the Trump administration presses for swift regulatory proposals to guide this growth. Lawmakers must grasp blockchain and digital assets technology to craft effective financial policies. As such, bridging these knowledge gaps will shape the future of crypto regulation in America.