Coinbase, America’s leading cryptocurrency exchange, has called on the US Congress to formulate a unique digital assets regulator.
They argued that digital assets like bitcoin, litecoin, ether, and other cryptos are now part of the financial market’s ecosystem. In their comprehensive proposal, Coinbase emphasizes that century-old laws are unsuitable for cryptocurrency markets.
The policy document notes that security laws drafted in the 1930s cannot fit current digital markets. According to Coinbase, such laws only risk oppressing and constraining innovation while driving cryptocurrency entrepreneurs out of the US.
Tensions have recently escalated between Coinbase and the Security and Exchange Commission (SEC). Brian Armstrong, Coinbase chief executive, accused the SEC of being opaque and sketchy after forcing the company to shelf Lend product plans with lawsuits threats.
The SEC chair, Gary Gensler, has emerged as a migraine for crypto companies saying that crypto exchanges trade coins uncompliant with investor protection laws. He accused Coinbase of failing to register with the regulator despite having tokens he characterized as securities. Coinbase has strongly disputed the characterization.
What exactly does Coinbase propose?
The policy document shared with Congress pushes for four new regulatory pillars. These include:
Separate framework for regulating digital assets
They urge lawmakers to separate oversight of digital assets from traditional financial markets. A new regulatory regime is needed with a specific legal framework for cryptocurrencies. This will ensure a legacy legal and market structure doesn’t hamper innovation.
Assign oversight responsibility to a single regulator
Coinbase calls for the government to designate a single federal regulator to oversee the digital assets markets. They explain that this will help avoid inconsistent and fragmented regulatory oversight. Currently, different institutions, including the Commodity Futures Trading Commission (CFTC), SEC, and IRS, all oversee sections of the crypto industry.
Empowerment and protection of digital assets holders
The crypto exchange giant asserted that mechanisms for increasing the confidence and security of decentralized products users are necessary. An additional self-regulatory organization (SRO) would support oversight and monitor dealers and exchanges for fraud or market manipulation signs. This would promote transparency and increase efficiency.
Promote fair competition and operability
The proposal points out that innovations in the peer-to-peer crypto market and the development of decentralized protocols increase financial access across all areas of society. For the full potential of digital assets like bitcoins to be realized, interoperability with services and products across the economy is crucial. It can enable responsible innovation, competition, and thriving consumer and developer ecosystems.
