Coinbase wants a single regulator to oversee digital assets. America’s leading crypto exchange made this proposal to the US Congress.
Coinbase believes that digital assets like Bitcoin, Litecoin, Ethereum and other cryptocurrencies are now part of the financial market's ecosystem. In the proposal, Coinbase emphasizes that centuries-old laws are unsuitable for crypto markets.
The motivation for the proposals is that the investor protection laws passed in the 1930s do not match the current situation. According to Coinbase, this only risks limiting innovation. Because these laws force crypto companies to leave the USA.
Tensions between Coinbase and the Security and Exchange Commission (SEC) have recently escalated. Brian Armstrong, the executive director of Coinbase, accused the SEC of acting opaque and dubious. That came after the SEC forced the company to put plans for the Lend product on hold under threat of litigation.
The chairman of the SEC, Gary Gensler, has emerged as problematic for crypto companies. He has said several times that when crypto exchanges trade coins, it is not in accordance with investor protection laws. He also accused Coinbase of failing to register with the regulator. In his view, it is necessary because the digital tokens traded on the crypto exchange are securities. Coinbase has vehemently denied this characterization.
What exactly is Coinbase proposing?
Coinbase has made a number of proposals to the US Congress. We are talking about four new pillars of regulation. That's them:
Separate framework for regulating digital assets
It calls on lawmakers to separate the supervision of digital assets from traditional financial markets. A new regulatory system with a specific legal framework for cryptocurrencies is required. This ensures that the old legal and market structure does not hinder innovation.
Allocation of supervision to a single regulatory authority
Coinbase is demanding that the government designate a single federal agency to oversee the digital asset markets. It was stated that it will help avoid inconsistent and fragmented oversight. Various institutions are currently overseeing the crypto industry, including the Commodity Futures Trading Commission (CFTC), the SEC, and the IRS.
Protecting digital asset owners
The crypto exchange Coinbase claims that mechanisms to increase the security of the users of decentralized products are necessary. An additional self-regulatory organization (SRO) would support supervision and monitor traders and stock exchanges for signs of fraud or market manipulation. That would promote transparency and increase efficiency.
Promotion of fair competition
Coinbase's proposal suggests that innovations in the P2P crypto market and the development of decentralized protocols will improve financial access in all areas of society. In order to realize the full potential of digital assets like Bitcoin, interoperability with services and products across the economy is critical. It can enable responsible innovation, competition, and thriving ecosystems for consumers and developers.
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