Crypto Vs SEC Heats up: Coinbase CLO Exposes Flaws In SEC’s Crypto Custody Proposal; What Next? 

In a daring transfer, Coinbase‘s Chief Authorized Officer, Paul Grewal, has taken to Twitter to talk out towards the SEC’s proposed revisions to the crypto custody guidelines. Whereas Coinbase helps the intentions behind the proposal, Grewal argues that it might have destructive penalties for the burgeoning crypto trade. 

His compelling counterpoints problem the SEC’s method and provide a extra measured answer. From contemplating state belief corporations as QCs to permitting restricted non-QC publicity for crypto buying and selling, Grewal presents a compelling case for why the proposal wants revision. 

Sustaining State Belief Firms as QCs

Grewal argued that the SEC ought to proceed to contemplate state belief corporations and different state-regulated monetary establishments as QCs. He emphasised that the present method works effectively and there’s no have to disrupt the longstanding coverage established by Congress and the SEC over time.

Restricted Non-QC Publicity for Crypto Buying and selling

The CLO boldly identified that the SEC’s proposal to ban RIAs from buying and selling on non-QC crypto exchanges would backfire, harming the very RIAs and purchasers it goals to guard. Grewal advocates for a extra measured method, permitting restricted non-QC publicity to allow RIAs to commerce cryptocurrencies for his or her purchasers with out pointless restrictions.

Tailor-made Requirements of Care

Grewal now calls for that the SEC should keep away from disrupting the fragile steadiness between custodians and purchasers by crafting tailor-made requirements of care primarily based on asset class and shopper sort. He proposes empowering subtle purchasers to barter their very own contracts, a transfer that acknowledges the distinctive challenges of the cryptocurrency market.

Different necessary counterpoints made by Coinbase:

• Enable RIAs to custody extra belongings, together with early-stage crypto tokens.
• Undertake a unified commonplace for holding crypto belongings at varied certified custodians.
• Regulate exterior reconciliation guidelines for belongings not in layered custodial relationships.
• Allow utilizing greatest out there knowledge sources like blockchains for reconciliation.
• Replace accounting steering to allow public corporations to carry crypto belongings with out steadiness sheet influence.

Coinbase To Work With SEC For Regulatory Readability

Coinbase appreciates the chance to contribute to the general public rulemaking course of and appears ahead to additional engagement with the SEC. Grewal expressed hope that by working collectively, they will convey extra readability to the market and enhance the proposed revisions.

Associated: Coinbase is Absolutely Dedicated to the US market, Says Armstrong – Coinpedia Fintech Information

The SEC’s custody rule revisions have ignited an exciting mental showdown between Coinbase and regulators. With the destiny of the cryptocurrency market hanging within the steadiness, a collaborative and constructive dialogue might make all of the distinction, shaping a regulatory framework that encourages innovation and progress.