Coinbase Urges SEC to Allow Staff to Hold Crypto for Better Regulation

Coinbase, a leading cryptocurrency exchange, has called for the removal of a rule that prohibits Securities and Exchange Commission (SEC) staff from holding cryptocurrency. The company's chief legal officer, Paul Grewal, sent open letters to the Office of Government Ethics (OGE) acting director Jamieson Greer and newly appointed SEC Chair Paul Atkins, advocating for the change. Grewal argued that SEC staff need to use cryptocurrency to better understand its workings and to develop effective regulatory frameworks.

Grewal emphasized that understanding technology requires direct use, stating, “To regulate technology, you need to understand it. To understand technology, you need to use it.” He further explained that permitting SEC staff to hold crypto is essential for them to gain the knowledge necessary to propose and adopt workable regulatory frameworks for digital securities activity. This push comes as the US President directed the SEC and other agencies to submit recommendations for crypto regulations within approximately 90 days.

Grewal highlighted that despite this directive, SEC staff are still unable to use the technology they are tasked with regulating. He suggested that the SEC should take its own action by issuing waivers to members of the Crypto Task Force and other staff actively working on related matters. This approach would allow SEC staff to use crypto and evaluate the underlying digital asset technology, enabling the development of more informed regulatory policies.

The previous SEC Chair, Gary Gensler, was known for his hardline stance on crypto regulation, bringing over 100 regulatory actions against firms during his tenure. Following Gensler’s resignation, the SEC has shown signs of a more lenient approach, opting out of several lawsuits against crypto firms, including Coinbase, and recently indicating plans to drop enforcement actions against blockchain firm Dragonchain.

Coinbase's advocacy for lifting the ban on SEC staff holding crypto reflects the company's commitment to fostering a more informed and balanced regulatory environment. By pushing for greater understanding and direct engagement with cryptocurrency, Coinbase aims to support the development of effective regulations that can drive the growth and innovation of the digital asset industry. This move underscores the importance of regulatory clarity and understanding in the rapidly evolving cryptocurrency space.