Coinbase calls for policy changes to ensure SEC workers retain code

Coinbase has formally requested that US regulators lift the ban prohibiting Securities and Exchange Commission (SEC) staff from buying or selling cryptocurrencies that are not securities.

In a letter dated April 22, Coinbase Chief Justice Officer Paul Grewal wrote to both the chairman of Paul Atkins and the U.S. Government Ethics Office, claiming that current policies are hampering regulators’ ability to effectively oversee the cryptocurrency industry.

Current policies undermine effective regulations, Coinbase argues

In the letter, Grewal points out that the ban will come at a particularly problematic time. President Trump has directed the SEC and other agencies to submit recommendations on regulatory proposals to advance US digital financial leadership within 180 days via executive order.

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Coinbase Clo points out that almost half of this timeframe has already been passed, but staff members still cannot use the technology they are responsible for restriction.

Grewal argues that we need to use it to understand technology, writing that the current situation hampers the SEC Crypto Task Force’s ability to help pave the way for regulatory clarity.

The company is asking the Government Ethics Bureau to revoke and update its legal recommendations 22-04. This prohibits committee staff from purchasing, selling or otherwise using crypto assets.

The letter to SEC Chair Atkins suggests a practical solution. One option is to issue exemptions to members of the Cryptocurrency Task Force and other staff who are actively working on cryptocurrency issues. According to Grewal, this approach is consistent with measures already taken in “a reasonable advisory situation.”

Additionally, the committee staff implementing cryptocurrency regulations can be directly responsible for proper understanding and evaluation of the underlying technology.

Coinbase proposes a more nuanced approach to potential conflicts of interest. The exchange suggested that SEC staff could own cryptocurrency under certain conditions. Grewal argues that the current blanket ban is particularly problematic given that most crypto assets activities do not include securities.

Alternatively, Coinbase suggests that the committee can make it clear that certain cryptocurrency holdings have no direct and predictable effect on the value of those assets.

Grewal notes that providing such relief is consistent with the views expressed by the inspector’s office. He said the ability of the committee to remain an effective regulatory authority requires continuous monitoring of the market environment and proper adaptation of expertise, rules, regulations and monitoring tools.

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