Coinbase Calls for SEC to Lift Prohibition on Staff Using Cryptocurrencies
Coinbase, one of the leading cryptocurrency exchanges, has formally requested U.S. regulators to lift the prohibition preventing Securities and Exchange Commission (SEC) staff from buying, selling, or using cryptocurrencies that are not considered securities. In letters dated April 22, Coinbase’s Chief Legal Officer, Paul Grewal, addressed SEC Chair Paul Atkins and the U.S. Office of Government Ethics, arguing that the current policy hampers regulators’ ability to effectively oversee the cryptocurrency industry.
Grewal emphasized that the prohibition comes at a critical time, especially with President Trump’s directive for regulatory proposals to advance American digital financial leadership within 180 days. The current policy undermines the SEC’s ability to regulate the cryptocurrency industry effectively, as staff members are unable to use the technology they are tasked with overseeing.
The letter from Coinbase calls for the Office of Government Ethics to rescind and update Legal Advisory 22-04, which restricts commission staff from engaging in cryptocurrency transactions. Grewal suggested issuing waivers to members of the SEC Crypto Task Force and other staff actively involved in cryptocurrency matters to allow them to properly understand and evaluate the technology.
Coinbase proposed a more nuanced approach to address potential conflicts of interest, suggesting that SEC staff could own cryptocurrencies under certain conditions. The exchange highlighted that the blanket prohibition is particularly problematic, given that most cryptocurrency activities do not involve securities.
The company’s proposal aligns with the Office of the Inspector General’s views, emphasizing the need for continuous monitoring of the market environment and appropriate adaptation of rules and regulations to remain an effective regulator. By allowing SEC staff to engage with cryptocurrencies, Coinbase believes this will pave the way for regulatory clarity and ensure that regulations are informed by a deep understanding of the underlying technology.
In conclusion, Coinbase’s call for the SEC to lift the prohibition on staff using cryptocurrencies reflects the evolving nature of the digital asset industry and the need for regulators to stay abreast of technological advancements to effectively oversee the market. As the cryptocurrency market continues to grow and evolve, regulatory agencies must adapt their policies to ensure they can effectively regulate this rapidly expanding sector.