Crypto exchange Coinbase wants the U.S. government to create a new, dedicated regulator to oversee the cryptocurrency industry.
Unveiled Thursday, Coinbase’s Digital Asset Policy Proposal suggests Congress pass legislation to regulate Marketplaces for Digital Assets (MDAs) – its term for crypto exchanges that offer custody and trading services, as well as borrowing and lending services – and create a registration process for these entities. The exchange also proposed that the crypto industry establish a self-regulatory organization (SRO) for crypto businesses.
CoinDesk first reported that Coinbase was developing this proposal last month.
Coinbase’s proposal suggests four “regulatory pillars” to guide this process: regulating digital assets under an industry-specific framework, creating the new regulator, establishing fraud protections and disclosure requirements for crypto businesses and promoting interoperability.
The proposal represents an escalation of Coinbase’s public fight with the Securities and Exchange Commission (SEC). Earlier this month, SEC Chair Gary Gensler told members of the House Financial Services Committee that the SEC had all the authorities necessary to regulate crypto, saying: “We don’t need another regulator.”
Despite Gensler’s assurances, the perception of crypto regulation in the U.S. has been that it is disjointed, with no single federal regulator assigned to the overall industry. The SEC oversees securities and has spent years filing enforcement actions against initial coin offering tokens and startups accused of violating federal securities laws, while its counterpart, the Commodity Futures Trading Commission (CFTC), oversees crypto futures markets and certain illicit activities like market manipulation.
However, there is no spot market regulator at the federal level.
In a statement supporting the proposal, former Acting SEC Chair and current Milken Institute Center for Financial Markets Director Michael Piwowar said, “I commend Coinbase for developing their thoughtful framework for regulating digital assets. Regulatory certainty in the United States is urgently needed to maintain our leadership in responsible financial innovation.”