Regulating in the Dark? Coinbase Calls for Lifting Crypto Ban on SEC Employees

Coinbase is calling for a policy shift that could allow staff at the U.S. Securities and Exchange Commission (SEC) to hold and use cryptocurrency — a move the exchange says is crucial for meaningful regulation of the digital asset sector.

In a pair of open letters shared on X on April 25, Coinbase Chief Legal Officer Paul Grewal pressed the U.S. Office of Government Ethics (OGE) to repeal an advisory that prohibits SEC personnel from investing in or using cryptocurrencies. The letters were addressed to OGE Acting Director Jamieson Greer and newly appointed SEC Chair Paul Atkins.

“To regulate technology, you need to understand it. To understand technology, you need to use it,” Grewal wrote, arguing that hands-on experience with crypto is vital for staff developing regulatory frameworks.

Grewal contends that preventing SEC employees from interacting with crypto assets hampers their ability to craft effective policies for a rapidly evolving industry.

A Rule Out of Step with Innovation?

The current restriction stems from Legal Advisory 22-04, issued by the OGE in July 2022. The advisory classifies crypto assets and stablecoins as non-publicly traded securities, meaning they fall outside existing exemptions that allow federal employees to invest in traditional markets like stocks.

Grewal’s letters emphasize that while the SEC’s Crypto Task Force is tasked with shaping regulations for the digital asset sector, its members are barred from directly engaging with the technology they are overseeing. He warned that this disconnect could compromise the quality and practicality of future rulemaking.