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Coinbase's chief legal officer Paul Grewal has launched another scathing attack on the U.S. Securities and Exchange Commission.
Speaking on the Decrypt gm podcast, Grewal said he shares the concern “that we are losing the script a bit here in the United States when it comes to crypto and crypto regulation.”
In February, the SEC imposed a $30 million fine on Kraken—another popular American crypto exchange—because its staking product allegedly violated securities laws.
Coinbase responded to the news by updating the terms and conditions of its staking service, prompting U.S-based clients to unstake several popular cryptocurrencies, including (SOL), (ATOM), (ADA), and Tezos (XTZ).
There are broader concerns that the SEC’s hard stance on digital asset regulation will eventually see American crypto businesses move offshore, with Grewal agreeing that “in other parts of the world, even in other jurisdictions that we consider to be friends and allies, there’s a very different kind of conversation happening.”
“I think you’d have to ask: is this the best we can do?” said Grewal. “Is it really a smart way to regulate crypto, to put not just exchanges like, but issuers and project developers all over the country, and all over the world, to the task of pulling threads out of speeches that are made by one or more commissioners, looking to media interviews that one or more commissioners or other SEC officials have given that suggest that all assets are securities?
‘A broken process’, says Coinbase exec
Grewal said that it's "a pretty broken process,” something “we could all agree on at least that much.” But it doesn't have to be that way.
He cited last year’s collapse of FTX, which he described as “nothing short of flat-out fraud,” conceding that events like this should give enough reasons for regulators to be concerned before they agree “on the right way to make sure that tragedies like that never happen again.”
“At the same time, I think it’s also important that we not allow that unfortunate event to shape how we’re thinking about the future when countries like France and many others are taking a very different approach to regulation,” said Grewal.
Last year, the SEC also reportedly launched an investigation into Coinbase for allowing U.S. residents to trade unregistered securities, with the crypto exchange submitting a formal petition for rulemaking regarding the regulation of digital asset securities.
The petition included dozens of specific questions and issues that Coinbase thinks are needed to be resolved for the proper rulemaking of the crypto space.
“It's still not too late, the train has not completely left the station,” said Grewal.
Still, he is concerned “that the response to that proactive engagement—not just by Coinbase, but by a number of others in crypto—has been to double down or triple down on subpoenas and on enforcement actions.”