Chief Policy Officer of Coinbase Faryaer Shirzad recently called on the US Congress to “step up” when it comes to crypto regulation.
Coinbase, the world’s second-largest cryptocurrency exchange by trading volume, has expressed its willingness to register its dormant broker-dealers with the U.S. Securities and Exchange Commission (SEC) but says it needs clear direction from Congress first. Faryar Shirzad, the exchange’s chief policy officer, made the comments during an appearance on CoinDesk TV’s on Friday. Speaking on the need for clarity in the regulation of crypto assets, he called on Congress to “step up” its efforts. While the U.S. approach to crypto regulation is seen as out of step with the rest of the world, Shirzad argued that there is still no clear path to registration for Coinbase, and that the lack of clarity is stifling innovation.
The debate over whether “every crypto is a security or not is a very American one,” said Shirzad, adding that the U.S. approach to crypto regulation is unique in that it uses two different market regulators. This means that the regulatory system in the U.S. is more fragmented than in any other country in the world, according to Shirzad. The U.S. has a securities regulator, the SEC, and a market regulator for commodities, the Commodity Futures Trading Commission (CFTC). Other countries typically have only one market regulator, which provides a more unified regulatory environment for businesses to operate within.
Cryptos are not securities
Shirzad pointed out that every crypto token is not a security. He said that his fact needs to be reflected in the U.S.’s approach to regulating the sector. He suggested that a more streamlined regulatory approach would provide crypto companies with the freedom to innovate, grow, and develop products that customers want. This would also ensure customers get the protections and disclosures they need. However, without clear guidance from lawmakers, Coinbase and other crypto businesses are left in a difficult position.
In the interview, Shirzad emphasized the need for Congress to “step up” and provide direction for the regulation of cryptocurrencies. He pointed out that bipartisan leaders in the House, Senate, and all relevant committees have expressed a desire to bring crypto under regulation. However, Shirzad argued that there is currently no clear direction for the industry.
While the SEC has argued that its existing rules provide clear regulations for crypto platforms that issue tokens, Shirzad said that there is still no clarity on what “tokenized assets” could be traded on a broker-dealer or on a national stock exchange. In addition, he said that it’s not clear what businesses would need to do to register as a regulated exchange. This lack of clarity is creating uncertainty for the industry, making it difficult for businesses to plan for the future.
Is Crypto Staking in Danger?
Shirzad argued that the lack of clarity is putting the U.S.’s status as a competitive crypto player at risk. He said that the country needs to remain a part of the crypto ecosystem. Falling behind in crypto innovation would be “catastrophic for American national security interests.” He also expressed concern that staking could be under attack in the U.S. Although, he said he doesn’t know whether this is the case.
The SEC has been stepping up its enforcement of crypto businesses in recent weeks. Last week, it ordered crypto exchange Kraken to close down its staking-as-a-service platform for its U.S. customers. The SEC settled with Kraken and fined it for its actions. The agency has also said that it plans to bring an enforcement action against stablecoin issuer Paxos. The latter allegedly sold an unregistered security token, Binance USD (BUSD). This week, the SEC announced that it would be suing stablecoin issuer Terraform Labs and its founder, Do Kwon, for misleading investors. All these extensive investigations are continuously piling up the pressure on crypto companies.