Coinbase Chief Legal Officer, Paul Grewal, wasted no time addressing concerns related to his employer’s recent charges by the Securities and Exchange Commission (SEC).
Just hours after the SEC’s allegations of securities law violations against Coinbase, Grewal appeared before the House Agriculture Committee to field questions about cryptocurrency market regulations.
Intense scrutiny
On June 6, committee members gathered to engage in a session of rigorous questioning, with Grewal being part of a five-witness panel that included other industry representatives and former regulators.
Earlier in the day, lawmakers had already subjected Rostin Behnam, chair of the Commodity Futures Trading Commission, to intense scrutiny on similar matters.
“While I will not and cannot speak to any of the specific allegations against [Coinbase], I do want to note that this kind of action is exactly why we are holding this hearing here today. Regulation by enforcement is not an appropriate way to govern a market, adequately protect customers or promote innovation.”
Glenn Thompson, committee chair.
Grewal, speaking about Coinbase’s compliance efforts, expressed frustration with the Securities and Exchange Commission (SEC), emphasizing that despite the repeated invitations to “come in and register,” Coinbase faced obstacles similar to those encountered by Robinhood.
When Coinbase made genuine attempts to comply by engaging in discussions on registration, they were ultimately dismissed after months of deliberation.
It is important to note that Coinbase underwent a rigorous and comprehensive vetting process with the SEC prior to its direct listing in 2021.
This vetting process involved thorough examinations of Coinbase’s operations, financials, and adherence to regulatory requirements. As a result, Coinbase was granted the opportunity to go public and offer its shares to investors.
However, despite successfully navigating the initial regulatory hurdles, Coinbase’s ongoing efforts to ensure compliance have faced challenges. Grewal’s comments shed light on the difficulties Coinbase encountered when attempting to fulfill their obligations under the current circumstances at the SEC.
Crypto investments look more appealing outside the U.S.
In a recent congressional hearing, unanimous agreement emerged among panelists and lawmakers regarding the necessary course of action for the cryptocurrency industry. Recognizing the importance of safeguarding consumers and promoting innovation, the consensus emphasized the urgency for immediate congressional intervention to address existing regulatory loopholes.
According to Grewal, a prominent figure in the field, the absence of swift action will perpetuate the lack of federal oversight in the spot market for digital asset commodities.
This regulatory gap poses potential risks to both investors and the industry as a whole. Grewal further warned that without adequate measures, the cryptocurrency sector will inevitably redirect its resources and investments away from the United States.
