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The Coinbase crypto regulation proposal will form a new attempt by the company to pioneer an innovative approach towards standardization in the digital currency ecosystem.
American crypto exchange Coinbase Global Inc (NASDAQ: COIN) is reportedly helping the United States Securities and Exchange Commission (SEC) in its attempt to roll out regulation governing the digital currency ecosystem. As reported by Coindesk, the Brian Armstrong-led cryptocurrency exchange is preparing to pitch a proposed regulatory framework to federal officials, according to people familiar with the matter.
Cryptocurrency regulations in the United States are a somewhat polarizing subject with many stakeholders in the digital currency ecosystem stating how unclear the law has been and its impacts on players in the industry. The country’s market regulators on their part are planning to change this narrative, with SEC Chairman Gary Gensler particularly expressing his interest in creating a framework by which crypto assets that are considered as securities will be classified.
Per the Coindesk report, the proposals being drafted by Coinbase are on track to be revealed in the coming days, and amongst the focal points of the framework is to suggest to the SEC what should be contained in the ‘Securities’ definition.
Caught in the Crosshairs
A number of crypto firms have been caught in the crosshairs of unclear securities laws as it governs the cryptocurrency industry. This trend has earned blockchain payments firm Ripple Labs Inc a long protracted lawsuit with the SEC as the firm was accused of selling XRP coins which are seen by the market regulator as a security offering.
Ripple has argued through its lawyers how it has sought clarity several times to ascertain the status of XRP to no avail. To further lend a voice to the confusion, the SEC has come out to clarify that premier cryptocurrency, Bitcoin (BTC), and Ethereum (ETH), the pioneering open-source blockchain network does not fall under the classification of a security per American laws. What made XRP different remains the subject of controversy.
Coinbase also escaped being caught in the regulatory crosshairs by canceling its proposed Lend program, after being warned by the market regulator that it would be sued if it proceeds with the plan. “As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below. We have also discontinued the waitlist for this program as we turn our work to what comes next,” Coinbase CEO Brian Armstrong said in a statement, adding:
“The SEC told us they consider Lend to involve a security, but wouldn’t say why or how they’d reached that conclusion. Rather than get discouraged, we chose to continue taking things slowly. In June, we announced our Lend program publicly and opened a waitlist but did not set a public launch date. But once again, we got no explanation from the SEC. Instead, they opened a formal investigation.”
Coinbase Crypto Regulation Proposals: A New Precedent for the Trading Firm
The Coinbase crypto regulation proposal will form a new attempt by the company to pioneer an innovative approach towards standardization in the digital currency ecosystem. The firm has previously pioneered the creation of the Crypto Rating Council back in 2019, an organization that helps projects in determining how closely tilted they are to being security.
Should the plans with the SEC be as reported, Coinbase will further extend its lead as a pacesetter in the digital currency world.