Coinbase, a number one cryptocurrency alternate, has submitted a proper response to the U.S. Securities and Alternate Fee’s (SEC) proposed rule modifications for funding advisers, expressing issues and suggesting amendments to make sure a good regulatory setting for the cryptocurrency trade.
In an in depth letter, Coinbase outlines a number of key points that it believes have to be addressed within the proposed rule.
Addressing assumptions about custodial practices
One of many major issues raised by Coinbase is the SEC’s proposed enlargement of Registered Funding Adviser (RIA) custody obligations to incorporate all shopper property, not simply funds and securities.
The corporate argues that the proposal depends on assumptions primarily based on the SEC’s expertise with securities, which might not be acceptable for different asset lessons, together with cryptocurrencies.
Coinbase believes that the proposal, in its present type, might have detrimental results on shopper safety and the event of the cryptocurrency trade.
To mitigate these dangers, the alternate means that the SEC revise its strategy to custodial practices and adapt the necessities to accommodate the distinctive traits of crypto property.
Coinbase additionally addresses the SEC’s request for touch upon whether or not to restrict the sorts of banks that may function certified custodians to these topic to federal regulation and supervision.
The corporate strongly disagrees with this suggestion and advocates for the continued recognition of state belief corporations and different state-regulated monetary establishments as certified custodians.
Coinbase argues that state monetary regulators are sometimes extra agile in responding to technological and financial modifications, and excluding state-regulated banks from the definition of certified custodians would go towards long-standing Congressional and Fee insurance policies that promote a dual-regulatory system for banks.
One other key subject raised by Coinbase is the SEC’s proposal to slender the exceptions permitting RIAs to custody bodily property and sure non-public securities.
The corporate contends that this limitation might successfully ban RIA shoppers from investing in asset lessons, comparable to early-stage crypto tokens, that can not be held by a professional custodian.
To resolve this concern, Coinbase proposes that the SEC increase the certified custodian exception to incorporate any asset that can not be maintained at a professional custodian.
This may permit RIAs to put money into a wider vary of asset lessons, together with those who leverage blockchain know-how and crypto asset market practices.
Coinbase seeks clarification for broker-dealers and possession or management
Lastly, Coinbase calls on the SEC to make clear the interpretation of “possession or management” for broker-dealers and rescind employees steerage that imposes the next custodial normal for crypto property.
The corporate asserts that broker-dealers needs to be topic to the identical necessities for crypto property as they’re for different asset lessons, and that the SEC ought to undertake a know-how and entity-neutral stance in the direction of crypto property.
By addressing these issues and implementing the mandatory revisions to the proposal, Coinbase believes that the SEC can create a extra equitable regulatory setting that fosters innovation and progress within the cryptocurrency trade whereas guaranteeing the safety of traders and the effectivity of markets.
Coinbase’s detailed response demonstrates the corporate’s dedication to working with regulators to form the way forward for the trade and highlights the significance of collaboration between the non-public sector and regulatory our bodies in creating efficient and honest guidelines that profit all stakeholders.
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