Coinbase (COIN) has filed a petition to the Securities and Exchange Commission criticizing the current state of cryptocurrency regulation in the U.S.
Chief Policy Officer Faryar Shirzad of the crypto exchange explained the reasons behind the petition in a blog post Thursday, saying that without effective regulation the U.S. will fall behind in digital asset innovation.
“When it comes to crypto securities there is a significant, foundational hurdle that has prevented that market from maturing. That hurdle is the fact that the securities rules simply do not work for digitally native instruments,” Shirzad wrote.
“Crypto assets that are securities need an updated rulebook to help guide safe and efficient practices,” Shirzad further argued. “Crypto assets that are not securities need the certainty of being outside those rules. Anything short of that will have the effect of entrenching incumbent technologies at the expense of innovation and ultimately, consumers.”
In the petition, Coinbase Chief Legal Officer Paul Grewal outlined the key challenges associated with regulating cryptocurrencies, including a lack of clarity on which digital assets constitute securities, and conflicting or unnecessary requirements.
Grewal also listed a series of questions for the SEC to consider in creating a regulatory framework, addressing classification, issuance, trading and custody.
The SEC itself has expressed concern about the lack of regulation surrounding cryptocurrencies. Earlier this week, the commission’s enforcement director, Gurbir Grewal, told Congress of his desire to expand the SEC’s Crypto Assets and Cyber Unit. On the same day, Gensler discussed his concerns with the lack of compliance from recent companies facing bankruptcy.