Amid the ongoing changes in the Securities and Exchange Commission (SEC) regulatory approach, Coinbase has suggested four key elements that could help provide the long-awaited clarity. The recommendations follow Commissioner Hester Peirce’s recent request for public input.
Coinbase Responds To Commissioner Peirce’s Request
On Thursday, Coinbase filed a detailed response to SEC Commissioner Hester Peirce’s request for information. In an X post, the company’s Chief Legal Officer (CLO), Paul Grewal, highlighted Peirce’s efforts to offer transparency, noting that getting regulations right could help the US lead the crypto industry.
Coinbase's CLO highlights Commissioner Peirce's efforts. Source: Paul Grewal on X
A month ago, Commissioner Peirce released a statement called “There Must Be Some Way Out of Here,” seeking input from the public on topics the Crypto Task Force was wrestling with when approaching the sector.
To her, “figuring out how to deal with the SEC on crypto issues [was] like a regulatory version of an escape room,” but “now it is time to help open the door” for clear guidelines and a comprehensive framework.
In a blog post, Faryar Shirzad, the company’s Chief Policy Officer (CPO), revealed that Coinbase offered 36 recommendations for resolving regulatory roadblocks the Commission has faced.
According to Coinbase, the Commission must address four central elements to “facilitate a functioning market for digital asset products and services.” The first element requires a clear taxonomy that defines digital commodities versus securities.
The post notes that the SEC must clarify that digital assets that don’t convey rights in a business enterprise are digital commodities instead of securities. Industry players have long requested a clear definition of digital assets that distinguishes between securities, commodities, and other types of tokens.
The company also recommended clarity on secondary market sales, asking the SEC to clarify that secondary market transactions are not securities transactions, regardless of their issuance. It’s worth noting that before the SEC dropped its lawsuit against Coinbase, the company filed an appeal to the Second Circuit Court of Appeals seeking clarification on secondary trades of digital assets.
At the time, the company stated there is “no more pressing issue in securities law today than the scope of the Securities and Exchange Commission’s authority to regulate secondary trades of digital assets.”
US Congress Needs To Step In
The third point suggests that the Commission defers to the US Congress “to establish the market framework and address ambiguities.” The post pointed out that developing a fair regulatory framework “does not lie solely with the SEC,” as Congress also has “a lot of work to do.”
Coinbase considers that the regulatory agency can help establish a “level playing field” for market participants and facilitate innovation. However, “Where those boundary conditions are unclear, defer to Congress to define the appropriate regulatory treatment for crypto assets and activities,” it noted.
A month ago, Shirzad asked US lawmakers to establish a robust regulatory framework that benefits the American crypto industry. In a blog post, the CPO urged Congress to act swiftly on crypto regulations and change the unwelcoming legislation that has harmed the industry’s potential in the country. He suggested lawmakers could enact thoughtful legislation to balance innovation and customer protection.
Lastly, Coinbase also considers the SEC should “focus on developing clear guidelines that recognize the economic reality of blockchain technology and the opportunity that exists to unlock the untapped potential of tokenized securities.”
Shirzad concluded that addressing these core points will enable the SEC, other federal agencies, and Congress to address further questions “vital to our industry’s future in the US.”
Bitcoin (BTC) trades at $86,391 in the one-week chart. Source: BTCUSDT on TradingView
