Breaking: Coinbase Legal Chief Sends Letter To US SEC On “Misguided” Rulemaking

Coinbase chief legal officer Paul Grewal on Tuesday sends a letter to the U.S. Securities and Exchange Commission (SEC) asking for several changes to the proposed rule regarding registered investment advisers (RIA) obligations to hold client assets at qualified custodians.

While the US SEC recognizes Coinbase Custody as a “qualified custodian,” Coinbase believes the revised RIA custody rule singles out crypto to make inappropriate assumptions about custodian practices based on securities. The SEC proposed rulemaking fails to protect other asset classes, including crypto assets.

Coinbase CLO Paul Grewal Diagrees With US SEC Rulemaking

Crypto exchange Coinbase’s chief legal officer Paul Grewal sent a letter to the SEC, calling the proposed rulemaking “Safeguarding Advisory Client Assets, Proposed Rule 223-1” misguided. Coinbase seeks revision to the proposal and related staff guidance to protect all asset classes, including crypto assets, which have not been classified as securities until now.

Coinbase owns and operates Coinbase Custody Trust Company, a qualified custodian for RIA clients. The custodian safeguards client assets from bankruptcy and cyber threats. Coinbase seeks the expanded custody obligations proposal must remain future-ready to protect new types of investments.

Paul Grewal suggests several revisions to the rule to protect investors. The changes include continuing to define state trust companies and other state-regulated financial institutions as qualified custodians, the longstanding Congressional and SEC policy. He proposes to allow limited exposure to non-qualified custodians removing the ban from RIA client trades on crypto exchanges that are not qualified custodians.

Moreover, the SEC’s rule should tailor standards of care by asset class and client type and allow sophisticated clients to negotiate their own contracts.

Coinbase Seeks Clarity on Crypto Regulations

The US SEC should comply with the court order and respond to Coinbase’s writ of mandamus this week. Coinbase compel the SEC to reply to its petition submitted in 2022. In the petition, the exchange asked 50 specific questions about the regulatory treatment of digital assets by the SEC, including how it applies securities laws to digital assets.

Currently, Coinbase actively seeks international expansion, with the potential for Bermuda or the UAE to become a strategic hub for Coinbase. However, the exchange seeks clarity on digital asset regulation from the US SEC before it plans the next move.

Also Read: US SEC Is Close To Taking Enforcement Action Against Binance

The post Breaking: Coinbase Legal Chief Sends Letter To US SEC On “Misguided” Rulemaking appeared first on CoinGape.