Coinbase has presented a regulatory framework for digital assets, calling on the US Securities and Exchange Commission (SEC) to clarify its guidelines.
This proposal is in response to a request from SEC Commissioner Hester Peirce, who oversees the agency’s crypto task force, seeking feedback on achieving regulatory clarity.
The exchange believes this effort corresponds with the rising demand for a clearly defined structure for the cryptocurrency sector.
Faryar Shirzad, Coinbase’s chief policy officer, noted:
“A transparent and cooperative approach will enable the agency and market participants to develop regulations that can deliver clarity and certainty for developers, establish straightforward rules for industry participants, and ensure effective protections for investors.”
Key components of Coinbase’s recommendations
Coinbase’s suggestions center around four fundamental elements vital for a robust digital asset marketplace.
The exchange stresses the importance of the SEC creating a distinct classification system that differentiates digital commodities from securities. Coinbase asserts that digital assets that do not confer rights in a business entity should be viewed as commodities rather than securities.
Coinbase argued that establishing a clear distinction between digital commodities and securities would facilitate the migration of traditional financial instruments onto blockchain platforms. This transition could improve global liquidity, simplify asset transfers, and reduce operational expenses by removing the inefficiencies associated with outdated, paper-based market frameworks.
Additionally, the exchange urged the SEC to reconsider its stance on classifying secondary market sales of digital commodities as securities transactions. It contends that the nature of a digital asset’s original issuance should not influence the classification of its secondary market trades.
Beyond suggestions meant for the SEC, Coinbase encouraged the agency to allow Congress to take the lead in developing a broader market framework. It emphasized that while the agency has a role in shaping regulations, it is essential for lawmakers to establish regulatory limits and address prevailing ambiguities.
The exchange also advocated for regulations that promote the growth of tokenized securities. It recommended tailored policy adjustments that align rules with the economic realities of blockchain, thereby unlocking new opportunities within financial markets.
Shirzad concluded:
“Addressing these key points directly will provide the clarity necessary for the SEC, other federal agencies, and Congress to efficiently tackle additional inquiries vital to our industry’s future in the US. Clear guidance will also expedite the adoption of more on-chain tools that transition traditional finance into a modern era, positioning the US at the forefront.”