Coinbase Pushes SEC to Lift Crypto Ban on Staff for Effective Regulation

Coinbase is requesting the SEC to remove the ban on staff buying, selling, or using cryptocurrencies that aren’t classified as securities. They believe that it will help regulators better understand and manage the crypto market.

In letters dated April 22, Coinbase’s CLO, paul grewal paul grewal paul grewal Chief Legal OfficerDirector requested that the SEC Chair, Paul Atkins, and the U.S. Office of Government Ethics change the policy. 

He argues that it limits the SEC’s ability to oversee the crypto industry effectively. Grewal further added that the ban is particularly concerning, as President Donald Trump Donald Trump Donald Trump is an American former president politician, businessman, and media personality, who served as the 45th president of the U.S. between 2017 to 2021. Trump earned a Bachelor of science in economics from the University of Pennsylvania in 1968. Trump won the 2016 presidential election as the Republican Party nominee against Democratic Party nominee Hillary Clinton while losing the popular vote. As president, Trump ordered a travel ban on citizens from several Muslim-majority countries, diverted military funding toward building a wall on the U.S.–Mexico border, and implemented a family separation policy. Trump has remained a prominent figure in the Republican Party and is considered a likely candidate for the 2024 presidential election President has ordered the SEC and other agencies to submit recommendations for advancing the US leadership in digital finance within 180 days. 

“SEC staff still cannot use the technology they are meant to regulate,” he pointed out. 

Grewal acknowledged that only the OGE has the authority to rescind the legal advisory. He also suggested solutions like issuing waivers to staff working on crypto matters, which will allow them to better understand and evaluate the technology they regulate. This approach would align with previous actions in similar situations, which will help the SEC craft better crypto regulations. 

Grewal Proposes Lifting SEC’s Crypto Ban with Restrictions

Grewal suggests lifting the ban, allowing SEC staff to hold cryptocurrencies, provided they aren’t involved in related matters. He proposes that staff be permitted to hold only major cryptocurrencies and stablecoins, with a limit on the amount they can own. 

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Many believe that the blanket crypto ban on the SEC staff is an overreach. Ji Kim, President of the Crypto Council for Innovation, compared it to the Federal Reserve banning staff from holding dollars due to their role in monetary policy. 

Those who support the restriction argue that it will prevent conflict of interest, insider trading, and other ethical risks. But still, there’s widespread agreement that regulators must understand the technology they regulate.