Coinbase Legal Officer Calls For Action To Let SEC Workers Buy Crypto

Coinbase Legal Officer Calls For Action To Let SEC Workers Buy Crypto

U.S. regulators have officially asked Coinbase to lift the ban on SEC employees owning cryptocurrencies. Last week, Coinbase’s Chief Legal Officer Paul Grewal sent letters to most important regulatory officials. According to him, current policy prohibits SEC staff from grasping the technology they regulate.

Key-Takeaways:

  • The SEC ban on employees’ cryptocurrency ownership was formally asked to be lifted by Coinbase CLO Paul Grewal. The policy of the current government prohibits regulators from comprehending the technology they are overseeing.
  • This is related to President Trump’s executive order that supervises agencies to make efforts in leading American digital financial leadership within 180 days. Already almost half this timeframe has gone by with these restrictions still in place.
  • Coinbase bounced into coldplays, such as waivers for Crypto Task Force members and the stipulation of controlled conditions for ownership. However, argue that most of the crypto action doesn’t involve securities anyway.
  • However, approval of this policy change could enable previous regulatory decisions to be made more informed based on firsthand experience. This has very serious ramifications for future cryptocurrency regulation in America.

Why Coinbase Wants Change Now

Coinbase Legal Officer Calls For Action To Let SEC Workers Buy CryptoThis timing directly correlates with President Trump’s recent executive order at the digital finance. It provides agencies with only 180 days to draft recommendations for promoting American leadership for digital assets. But that nearly half this time of restrictions is already passed.

And in April 22 letters, Grewal noted, “SEC employees cannot use the very technology that they must regulate.” He says this presents a serious problem for wise oversight. Under the current ban, staff are barred from buying, selling, or using the crypto assets that are not assets of securities.

He also made his concern public on Twitter. He wondered why SEC employees may need to face such restrictions in light of the fact that potential conflicts can be handled appropriately.

However, Coinbase’s legal team didn’t just point out problems but also provided solutions. They first asked the Office of Government Ethics to revise Legal Advisory 22-04, which set the prohibition. They also called for aid directed at key personnel.

Given that, another practical course of action would be to provide waivers to those SEC members on the Crypto Task Force. Doing so would provide a close working relationship between staff who are responsible for overseeing crypto regulations and the men actually tasked with implementing them. According to Grewal, this is the same approach as the SEC has taken with previous similar advisory situations.

Managing Potential Conflicts

Coinbase Legal Officer Calls For Action To Let SEC Workers Buy CryptoHowever, Coinbase says the conflict of interest concern can be patched up without an absolute ban. Under some controlled conditions, the exchange is proposing that staff can own them.

Most crypto activity is not about securities, the company stresses. From their perspective, therefore, the blanket prohibition is made particularly problematic. Coinbase instead suggests that the Commission could make it clear which crypto holdings won’t give rise to conflicts.

Interestingly, Grewal’s letter cites a surprising supporter: the Office of the Inspector General. Previously, this oversight body said that effective regulation needs constant monitoring of market conditions. The Inspector General also stressed the requirement of adapting expertise and regulatory tools.

By this argument, Coinbase makes the case that its request is in agreement with the principles already accepted under the regulatory regime. Overall, this has the effect of making a better case for policy change.

Why This Matters For The Industry

Coinbase Legal Officer Calls For Action To Let SEC Workers Buy CryptoThis request could be the start of a major impact on cryptocurrency regulation in America. For the SEC staff, firsthand crypto experience may be more likely to provide a better understanding of the technology’s nuances and capabilities. To an extent, this could aid in the making of more informed regulatory decisions in the future.

It also points to increased pushback between the crypto world in general and the existing rules and regulations. According to Coinbase, though, real-world experience will lead to its users and the regulatory setups becoming better understood and ultimately more favorable.

That connects to larger changes in politics that followed President Trump’s executive order for crypto assets. This is the critical period for defining how America will govern the volatile world of cryptocurrency, say many industry people.

Conclusion: Coinbase is a work in progress.

Up to the SEC and Office of Government Ethics now is the formal request from Coinbase. It has registered no immediate response from both agencies. The crypto is watching the signs of policy change in the coming weeks. However, the agencies would not have to extend current restrictions and would be allowed to say they are simply concerned that they might be forced to worry about possible conflicts of interest.

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