Summary:
- Coinbase’s Chief Legal Officer Paul Grewal spoke up against the SEC’s proposed revisions to federal custody requirements.
- Grewal said that the new rule would „unnecessarily single out crypto“ assets.
- The exchange has suggested a more inclusive approach to qualified custodians and a unified possession or control standard for crypto assets.
SEC Proposed Custody Rule Criticized by Coinbase
Coinbase’s Chief Legal Officer Paul Grewal recently spoke up against the U.S. Securities and Exchange Commission’s proposed revisions to federal custody requirements. The proposed rule would require registered investment advisers (RIAs) to hold client assets at qualified custodians and could “drastically curtail” crypto investment, according to Marisa Tashman Coppel, Policy Counsel for the Blockchain Association.
Grewal said in a Twitter thread that he agrees with the “spirit of the proposal,” but believes it “unnecessarily singles out crypto.” Additionally, Coinbase has officially added its comments on the deadline for submission on May 8th suggesting a more inclusive approach to qualified custodians and a unified possession or control standard for crypto assets.
SEC Proposal Details
In its comments regarding the proposed rule change, Coinbase suggests a more inclusive approach to qualified custodians and a unified possession or control standard for cryptocurrency-related products offered by RIAs—not just those related to traditional securities like stocks and bonds. The exchange further argues that such an approach should be applied across all asset classes so customers can benefit from greater choice when selecting their preferred RIA service provider.
Opposition from Other Crypto Companies
This is not the first time companies in the cryptocurrency space have spoken out against SEC rules. Ripple CEO Brad Garlinghouse criticized US regulators last October after filing suit against YouTube over fake XRP giveaway scams, claiming that US regulators are behind other countries when it comes to regulating cryptocurrency-related activities. In response, Ripple filed suit against YouTube accusing them of profiting off these scams while failing to protect consumers as per their terms of service agreement with customers.