Coinbase to Help Develop Cryptocurrency Regulations

Coinbase has announced it is working on a proposal to aid cryptocurrency regulation in the country. This comes after the firm clashed with the Securities and Exchange Commission (SEC) over its proposed Lend feature.

Coinbase has always been quick to comply with regulations. As such, it came as a rude shock to the company that the SEC threatened to sue if it continues with its LEND plan. After announcing its intention to launch Coinbase Lend, the firm received a Wells Notice from the SEC. As a result, the plans were suspended.

Current Cryptocurrency Regulations Ambiguous, Says Grewal

Chief Legal Officer of the exchange, Paul Grewal, lamented SEC’s refusal to explain the act. He noted that regulations in the industry were ambiguous and not clearly defined. The development of a proposal by Coinbase is thus to ensure that the entire industry has clear regulatory policies that guide operations.

According to Coinbase CEO, Brian Armstrong, the exchange will present the proposal in October. He revealed this while addressing the audience at the TechCrunch Disrupt 2021 event. Armstrong is optimistic the authorities in Washington will be open to such a proposal. “Coinbase wants to be an advisor and a helpful advocate for how the U.S. can create that sensible regulation.” He told listeners.

This is What Regulators Want

Armstrong claims regulators in Washington have asked for such proposals in the past to guide their policy development. He believes this is because the regulators want digital currencies to be regulated federally – as against what currently obtains.

Currently, businesses have to obtain licenses from regulators in their states of operation. For example, Coinbase has licenses from about 50 different state regulators for different things FINCEN, SEC, CFTC, IRS, Treasury, and OFAC are some of the regulators to mention a few.

Armstrong also acknowledged that there was a need for more stakeholders and lawmakers to be involved in the process. He said: “We have a proposal that we actually want to put out there that could help maybe create at least one idea about how to move forward. But this is going to require input from a lot of people, and that willingness [on the part of lawmakers] to kind of engage with private industry and learn about what the opportunity is here.”

Coinbase isn’t the only company to have been denied the opportunity to launch a lending feature. In recent months, BlockFi and Celsius, have also been denied by different U.S States regulators. Thus, any win for Coinbase will likely result in a win for them.

Interestingly, some have opined that what Coinbase is doing is to create the kind of regulation only it can adhere to, as big brands often do. Such regulations keep smaller businesses from being able to compete with them. Agreeing to this, tech writer, Byrne Hobart called it, The Facebook standard.