Boardroom spoke to Coinbase chief legal officer Paul Grewal about elements critical to the rules that govern digital assets.
Coinbase is a sponsored partner of Boardroom.
The power of the blockchain has always been that it was created to be expansive and unregulated by one governing party. But it looks like that will change in the US as the digital asset industry continues to grow.
Earlier this month, Boardroom detailed some key events in the past two-and-a-half years that have led to a lengthy legal battle between the US Securities and Exchange Commission (SEC) and Coinbase. The SEC has been vocal about its reluctance to accept cryptocurrencies as securities, yet it hasn’t set any regulations for crypto exchanges to operate in the US legally. Coinbase has been the top crypto company to challenge the SEC to set those ground rules so that it can continue business as usual.
It seems like a simple ask that the commission is shying away from, but Coinbase doesn’t think it’s too late to get it right. The company’s chief legal officer, Paul Grewal, told Boardroom that he thinks the SEC is skeptical to accept digital assets and cryptocurrencies and is never quick to embrace new innovations.
“The good news is that there’s still time to get this right, which is why even as we are defending ourselves in court, we continue to urge the SEC to adopt the rules that would allow exchanges like ours to list digital asset securities,” Grewal told Boardroom.
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The biggest struggle for crypto issuers today is that they can’t comply with the rules that currently exist for securities. That’s generally because they don’t accommodate some of the unique features of crypto. As a precursor before considering crypto regulations and legislation, Grewal said it’s important to understand that 52 million Americans have already bought, sold, traded, and engaged with cryptocurrencies and digital assets.
“That’s many more Americans than that have driven an electric car or gone to an NFL game or anything else. It’s a huge percentage of the country that has already said we want this as part of our future,” Grewal said. “We think that with certain additional rules and standards in place, we will see that number grow even higher.”
Here are the two key elements that Coinbase’s chief legal officer said would be critical to laying out rules and frameworks to govern digital assets:
- Devising a way for digital asset security issuers — the people who actually start these cryptocurrency and digital asset projects — to register, list, and issue those assets that qualify as securities in a sensible way.
- Creating a pathway for registration for exchanges like Coinbase so that crypto issuers can offer digital asset securities to customers in a safe and regulated manner.
Ultimately, Coinbase is pushing for crypto regulations to foster confidence across the market and believes crypto regulations are going to be critical to the success of the US economy and financial system in the future. Aside from the SEC, Coinbase hopes Congress will eventually step in and push some bills through to address how digital assets should operate.
“What we need in this country is legislation that addresses the structure of this market,” Grewal said.
As Coinbase’s court cases make their way through the judicial system, Boardroom will continue to follow them and other major moves across the crypto market.
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