Coinbase has made its case to the U.S. SEC requesting permission for employees to engage with cryptocurrencies. Through Legal Advisory 22-04 issued by OGE, the policy seeks to minimize conflicts of interest. According to Coinbase, the prohibition sets back the SEC’s capabilities in managing the expansion of digital assets.
Paul Grewal from Coinbase, as their Chief Legal Officer, declared that adequate regulation depends on a complete comprehension of cryptocurrency technology. He mentioned that full comprehension of the technology requires regulators to use technology as an investigative tool. The restrictive relationship between the SEC staff and cryptocurrencies enables increased informed and balanced regulatory methods, according to Grewal.
Source: oge.gov
The current restriction interferes directly with the work of the Crypto Task Force managed by the SEC. According to Grewal, staff members who lack knowledge of the products they supervise encounter major difficulties when conducting their responsibilities. He argues that task force members should receive special exemptions since this strategy has been used to overcome regulatory conflicts in different situations.
Proposed solutions for improved regulation
Coinbase presents two primary solutions to resolve the issues. Coinbase proposes that the SEC should permit its staff working on cryptocurrency issues to receive exemptions from specific regulations. Employees should receive waivers to participate in cryptocurrency matters under ongoing supervision from the SEC. Grewal argues that waivers function successfully in similar scenarios since they serve as an established methodology.
As a second step, Coinbase recommends that the SEC implement defined standards to govern cryptocurrency investments among its personnel. The SEC should create limits that will control potential conflicts of interest while fostering employee understanding of digital assets.
Closing the gap between regulation and innovation
Currently, staff comprehension as well as regulatory ambiguity increase due to the SEC’s strict policy guidelines. The agency faces criticism from Coinbase regarding its choice to base enforcement on actions instead of creating clear regulations. Cryptocurrency engagement from the SEC would lead to improved regulation along with both enhanced oversight capabilities and better innovation promotion.
Coinbase is advocating for regulatory change because experts now believe that effective regulations should derive from real-life experiences. The process of uniting emerging technology with regulators will drive the creation of a robust regulatory framework for modern times.
