Cryptocurrency trading platform Coinbase wants to help guide any emerging regulation on exchanges like itself, for obvious reasons, and in an interview with TechCrunch Editor-in-Chief Matthew Panzarino at TechCrunch Disrupt 2021 on Tuesday, Coinbase CEO and founder Brian Armstrong revealed it’s preparing a draft regulatory framework for consideration by federal lawmakers which it aims to distribute sometime within the next month.
“CoinbasewantstobeanadvisorandahelpfuladvocateforhowtheU.S.cancancreatethatsensibleregulation,” Armstrong said in the interview. “Infact,there’saproposalthatwe’reputtingoutattheendofthismonth,ormaybeearlynextmonth, thatisourproposedregulatoryframework.”
Regulators typically seek industry feedback when forming new rules, particularly in industries where the pace of technological advancements mean that progress in the market has far outpaced the development of new, and amendment of existing, regulation. Armstrong said that he has in fact been asked multiple times for such a proposal.
“WhenIgotoDC,I’vemetwithanumberofpeopleingovernment,andtheytypicallywillaskus ‘Well,doyouhaveadraft, do youhaveaproposalofsomethingwecouldtrytoshoparoundabouthowthiscouldberegulated federally?’,” he said. “Becauserightnow,Coinbasehas,youknow,50differentstateregulatorsformoneytransmissionlicenses,50forlendinglicenses,youknow, FINCEN, and SEC, andCFTC,andIRSandTreasuryandOFAC.”
Armstrong clearly would prefer if there were an overarching federal framework that would alleviate the burden of dealing with independent state-by-state rules and agencies. But he also did seem aware that any proposal they put forward will definitely be just a single piece of a larger puzzle, which will include input from other industry entities working in crypto as well as guidance from existing related regulation.
“Wehaveaproposalthatweactuallywanttoputouttherethatcouldhelpmaybecreateatleastoneideaabouthowtomoveforward,” he said. “Butthisisgoingtorequireinputfromalotofpeople, andthatwillingness [on the part of lawmakers]tokindofengagewithprivateindustryandlearnaboutwhattheopportunityishere.”
Coinbase recently clashed with the SEC after teasing the launch of a ‘Lend’ product that would allow its users to stake their crypto holdings in exchange for a return in the form of yearly interest. The SEC threatened to sue over the product since it signaled that this would represent a security, and be regulated as such, and Coinbase quietly walked back its plans to debut the product for now shortly after making public the SEC’s threat and articulating its lack of comprehension about the potential regulatory backlash.
