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Special crypto regulator coin base pitch blueprint

Washington — The largest crypto exchange in the United States, according to a policy blueprint reviewed by the Wall Street Journal, Congress blocked the Securities and Exchange Commission’s early industry oversight and replaced it with a special regulator of digital assets. I hope to create it.

Coinbase COIN 4.86%

Global Inc has been in a feud with US regulators in recent months. Will publish a document containing cryptographic regulation proposals. Cryptographic market participants say they are facing uncertainty about which federal agency should oversee a particular asset.

Coinbase’s push comes in a widespread clash between the company and SEC Chairman Gary Gensler, which has emerged as the biggest headache for crypto companies in recent months. He says many crypto exchanges are trading coins that don’t comply with investor protection legislation, discouraging legislators from establishing another regulatory agency.

A Coinbase spokesman declined to comment.

At a parliamentary hearing last week, Gensler said: “Well, wait a minute. There is a regulatory arbitrage.”

Coinbase argues the opposite approach in its policy documentation. Rather than facing regulatory threats from multiple agencies such as the SEC and the Commodity Futures Trading Commission, digital assets require one designated regulatory agency.

“Law drafted in the 1930s to promote effective surveillance of financial markets could not envision this technological revolution,” Coinbase wrote in his treatise, referring to the era of law that created the SEC. I am. “Parliament should recognize by law that all digital assets, including digital native versions of traditional financial assets, must be subject to the new regulatory regime.”

Coinbase marketing comes when the Biden administration strengthens its scrutiny of crypto assets, including coins whose value is fixed in the US dollar. Coinbase itself has a feud with the SEC, stating that many digital assets are securities subject to investor protection legislation.

In September, Coinbase CEO Brian Armstrong wrote in a series of Twitter messages that the SEC threatened enforcement measures against the unregulated cryptocurrency lending program that the company wanted to launch.

Armstrong said the SEC’s backlash against the product was equivalent to a “closed-door threatening tactic.” Coinbase said authorities wouldn’t reveal why the program is regulated. In a longer blog post, Coinbase revealed that the SEC considers products to be securities and cited two Supreme Court decisions defining the characteristics of debt and equity securities.

Coinbase initially decided to oppose the offer of the product after stating that it could fight the SEC in court over the product.

Bitcoin mining facilities in northern New York use electricity from a local hydroelectric power plant powered by the Niagara River. The company is part of a group of miners seeking to make the industry more sustainable, both environmentally and economically. Illustration: Alex Kuzoian / WSJ

Coinbase has been accused of fraud by other regulatory agencies. In March, we paid $ 6.5 million to resolve CFTC’s allegations that it reported misleading information about trading volumes. Coinbase said at the time that the act did not harm the customer and cooperated with the CFTC’s investigation.

The company’s policy plan states that a single regulatory agency eliminates the need for fragmented oversight by numerous federal and state agencies that crypto companies also have to deal with. According to Coinbase documents, private industry-funded entities under the supervision of an independent federal regulatory agency monitor the operations of exchanges and dealers and signs of fraud.

It’s unclear how Coinbase plans to generate legal support that regulates cryptocurrencies separately from other assets. Many Democrats in Congress, including Senator Elizabeth Warren (D., Massachusetts) and Sherrod Brown (D., Ohio), are skeptical of the industry.

Write to Paul Kiernan (paul.kiernan@wsj.com) and Dave Michaels (dave.michaels@wsj.com)

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Special crypto regulator coin base pitch blueprint

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