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Amid growing calls for regulatory clarity, Coinbase has outlined essential priorities for Congress to address the future of digital assets.
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The exchange emphasizes the necessity of clear definitions for digital assets, which may influence how different tokens are classified.
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“Without a clear legal framework,” Shirzad warned, “the US risks losing ground in the rapidly evolving crypto economy,” according to a recent statement from COINOTAG.
Coinbase presses Congress for clarity on digital asset regulations, urging a regulatory shift that balances innovation and consumer protection.
Coinbase’s Legislative Priorities for Crypto Law Reform
Faryar Shirzad detailed these priorities in a blog post on Wednesday. The Coinbase executive emphasized the need for a balanced approach to innovation and consumer protection. The blog post warned that the lack of a clear legal framework leaves US innovation at risk and consumers vulnerable to fraud.
Based on this, Coinbase proposed clearly defining digital assets. Shirzad explained that this would enable Congress to distinguish between securities, commodities, and other digital tokens, ensuring investor protection and market integrity.
Shifting Regulatory Oversight to the CFTC
The renowned exchange also wants the Commodity Futures Trading Commission (CFTC) to be granted authority over crypto spot markets. Specifically, the CFTC, not the SEC (Securities and Exchange Commission), should regulate digital assets like Bitcoin and Ethereum. This aligns with the Trump administration’s reported policy shift amid calls to tap into the CFTC’s lighter regulatory touch.
Coinbase also calls for establishing clear capital-raising rules. The SEC should create transparent guidelines for blockchain fundraising without classifying every token as a security. It also wants stablecoin regulations implemented to ensure full backing of these assets and that they are subject to clear oversight for financial stability.
Protecting DeFi and Encouraging Innovation
Another priority is protecting decentralized finance (DeFi) and digital commerce. According to Coinbase, this would ensure that DeFi platforms and non-fungible tokens (NFTs) remain free from excessive regulation. This, Shirzad says, would encourage innovation.
Lastly, Coinbase stresses the importance of clarity for centralized crypto entities, allowing exchanges and custodians to follow clear federal or state-level guidelines for accountability.
Challenges Facing US Cryptocurrency Innovation
Shirzad emphasized that the US risks falling behind in blockchain innovation without legislative action, pushing developers and businesses to move abroad. Inaction could leave consumers unprotected and hinder America’s leadership in the digital economy.
With these priorities, Coinbase urges lawmakers to seize this opportunity to create a regulatory framework that balances innovation with consumer protection. These priorities align with the exchange’s predictions for 2025, when a favorable regulatory environment is expected to drive market growth.
Ongoing Legal Battles and Regulatory Advocacy
Coinbase has been at the forefront of legal battles against regulatory overreach. The company has taken on the FDIC (Federal Deposit Insurance Corporation), accusing it of withholding critical documents on crypto oversight.
Additionally, its Chief Legal Officer (CLO), Paul Grewal, recently testified before Congress on crypto debanking. Grewal reinforced the exchange’s commitment to fair regulatory practices. Meanwhile, the US-based exchange recently predicted a favorable regulatory environment would drive market growth.
Conclusion
In summary, Coinbase’s call for defined regulatory guidelines seeks to fortify the US’s position in the global crypto market while protecting consumers. The proposed reforms could pave the way for a cohesive framework that nurtures innovation while ensuring stability and investor confidence in the digital asset ecosystem.
