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Coinbase calls for new crypto regulator

Coinbase calls for new crypto regulator

Fresh from a tussle with the SEC, cryptocurrency exchange Coinbase has called for the creation of a new US regulator to oversee digital assets.

In a blog, Coinbase chief policy officer Faryar Shirzad says that while digital assets have quickly become a mainstream part of the financial market ecosystem, "laws drafted in the 1930s to facilitate effective oversight of our financial system could not contemplate this technological revolution".

The crypto giant's answer is set out in a paper called Digital Asset Policy Proposal: Safeguarding America’s Financial Leadership (dApp).

The paper calls for digital assets to be regulated under a separate framework from the existing financial system and for there to be one federal regulator to do this. This new framework should have three goals: enhance transparency; protect against fraud and market manipulation; and promote efficiency and market resiliency. Finally, the new regulator should promote interoperability and fair competition.

Coinbase has had a spiky relationship with regulators, most notably the SEC, which the firm's CEO Brian Armstrong recently accused of some "really sketchy behavior," adding that it refused to meet with him in Washington earlier this year.

Last month, the company abandoned its planned interest-earning product two weeks after the revealing that the SEC was threatening to sue over the issue.

Comments: (3)

A Finextra member
A Finextra member 15 October, 2021, 16:55Be the first to give this comment the thumbs up 0 likes

The challenges that the crypto exchanges are facing could have been avoided if they had listened to the warning from regulators going all the way back to 2008.

Their biggest challenge all along was the lack of transparency of who really owns the exchanges. Here is South Florida where drug money and human tracking thrives, bitcoin has been the top choice to laundry their money. In some cases, they own the bitcoin exchange that later on closed its doors over night without warning because the FBI was closing in on their operations.

 

A Finextra member
A Finextra member 18 October, 2021, 06:45Be the first to give this comment the thumbs up 0 likes

Much in the stable coin set-ups speak for that they should meet very similar reegulatory demands as deposit taking institutions have. Should a large part of the stable coin holders request a conversion to "fiat currency" the providers need to manage it. If they start paying interest the similarity with bank account deposit is growing. Holders of the stable coins should enjoy same protections as bank depositors in most mature markets do: Depositor protection by a third party or even by the central bank up to a threshold amount - and subsequently the stable coin operator needs to pay for this depositor protection. This in addition to equity requirements in high quality liquid assets. When used for payments they should adhere to the same regulatory demands as set out in the payments legislation, aml/atf directives, the data privacy rules and open banking requirements other deposit takers and payment institutions adhere to. No need for a "new regulator" or even new rules, all legislation should be tech neutral and no reason for the authorities to have lesser rules on crypto currencies. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 October, 2021, 10:24Be the first to give this comment the thumbs up 0 likes

New regulator? LOL.

Crypto / DeFi was supposed to be a separate financial system that was impervious to regulation and censorship. If only the actual product had come close to its GTM story, we wouldn't be talking about *any* regulator for this space, let alone a new and separate regulator. Sigh.

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