Coinbase Urges SEC to End Crypto Ownership Ban for Staff

Coinbase Urges SEC to End Crypto Ownership Ban for Staff

Coinbase is pressing U.S. authorities to lift a ban that prevents Securities and Exchange Commission (SEC) staff from owning cryptocurrencies, arguing that the restriction impedes effective regulation of the digital asset sector.

Coinbase Pushes for Crypto Access Among SEC Regulators

In an open letter published April 25, Coinbase’s Chief Legal Officer Paul Grewal appealed to the U.S. Office of Government Ethics (OGE) and newly-appointed SEC Chair Paul Atkins, requesting that the prohibition on SEC staff holding cryptocurrencies be rescinded.

“To regulate technology, you need to understand it. To understand technology, you need to use it,” Grewal wrote, emphasizing that hands-on experience is critical for the SEC to create workable regulatory frameworks for digital securities.

At the center of Coinbase’s complaint is Legal Advisory 22-04, issued by the OGE on July 4, 2022, which forbids SEC employees from buying, selling, or holding cryptocurrencies and stablecoins. The advisory excludes these assets from the exemptions granted to publicly traded securities like stocks, creating a regulatory blind spot in crypto policy development.

White House Pressure Adds Urgency

Grewal noted that a directive from former President Donald Trump required federal agencies, including the SEC, to submit crypto regulation recommendations within 90 days. Despite the tight timeline, Grewal criticized that SEC staff are still prohibited from using the very technologies they are tasked with regulating.

He argued that granting waivers to members of the SEC’s Crypto Task Force would be a pragmatic interim step, allowing regulators to evaluate digital asset technology firsthand without breaching ethics guidelines.

“For example, issuing waivers to Crypto Task Force members and other staff actively working on task force matters would be consistent with measures already taken in commensurate advisory situations,” Grewal wrote.

SEC’s Shifting Stance Post-Gensler

Coinbase’s call for reform comes amid broader shifts within the SEC following the January 20 resignation of former Chair Gary Gensler, who had pursued an aggressive agenda against crypto firms. Under Gensler’s leadership, the SEC brought over 100 enforcement actions against digital asset companies.

Since Gensler’s departure, the SEC has dropped several high-profile lawsuits, including actions against Coinbase and blockchain firm Dragonchain. In a major move on April 24, the SEC signaled its intent to scale back enforcement against Dragonchain, hinting at a potentially softer regulatory environment.

Coinbase’s Broader Transparency Campaign

This latest push builds on Coinbase’s broader efforts to challenge regulatory opacity. Earlier this year, Coinbase filed a Freedom of Information Act (FOIA) request seeking data on the cost and impact of the SEC’s so-called “war on crypto.”

The battle over staff crypto ownership highlights the growing friction between traditional regulatory frameworks and the fast-evolving landscape of digital finance — a conflict unlikely to abate as crypto markets continue to expand globally.