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Because of the SEC’s continuous witch hunt targeted at the crypto sector, Coinbase believes a separate regulator will be better. However, the SEC disagrees.
Major crypto exchange Coinbase wants the US Congress to create a separate special regulator for digital assets. The company says federal legislators should move to block the securities and exchange commission (SEC) from assuming control of the industry.
Coinbase has locked horns with US regulators – most notably the SEC – in recent months over compliance issues. SEC Chair Gary Gensler, is a known skeptic of digital currencies, particularly because they lack proper oversight. Furthermore, Gensler argues that several crypto exchanges trade coins that do not comply with investor protection laws. Unsurprisingly, he opposes the idea of a separate crypto regulator and is discouraging lawmakers from doing so.
As a result, leading crypto exchange Coinbase plans to publicly release a document with proposals for crypto regulation. It opines that crypto market players are not clear on which federal agencies should oversee which particular assets. Furthermore, the exchange emphasized that its proposal takes into account feedback from policymakers as well as crypto’s unique traits.
Coinbase and SEC Differ on Proposed Crypto Regulator Idea
Coinbase’s chief policy officer, Faryar Shirzad, acknowledged that the exchange does not expect its proposal to kick into effect immediately. However, the crux of Coinbase’s move for a separate regulator is to induce conversations around the matter and create more crypto awareness. In Shirzad’s words on suggesting the next plan of action:
“…what they can do is evolve the debate in ways that are helpful for everyone, including members of Congress who are increasingly focusing on this area.”
Gensler, however, does not agree even a little bit. Speaking at a congressional hearing which took place last week, the SEC Chair said:
“I would say, cautionary note: If Congress were to carve something out of the securities law, it could also undermine 90 years of economic success and undermine the 7,000-plus issuers…”
Both the SEC and Coinbase further traded soundbites in statements issued for and against the idea of a separate crypto regulator. In addition, Coinbase’s proposal comes amid the Biden administration actively ramping up oversight of crypto assets. The said assets also include stablecoins whose value is in line with the US dollar.
Coinbase’s Proposed Crypto-Lending Scheme
Back in September, Coinbase CEO Brian Armstrong tweeted a series of messages alleging that the SEC was investigating its crypto-lending program. The Commission asked Coinbase to desist from going forward with what it perceived as an unregulated initiative. Furthermore, it threatened to take legal action against the exchange if it did not heed the regulator’s warnings. Armstrong criticized the SEC’s actions, branding them as veiled intimidation tactics. In addition, the exchange’s CEO suggested other crypto companies already offer similar programs. Armstrong also accused the SEC of viewing Coinbase’s crypto-lending initiative as a violation without providing a reason.
“They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why,” said he.