Coinbase’s Paul Grewal says SEC proposed custody rule ‘unnecessarily singles out crypto’
Coinbase Chief Authorized Officer Paul Grewal spoke up in opposition to the U.S. Securities and Change Fee’s proposed revisions to federal custody necessities that require registered funding advisers (RIAs) to carry consumer property at certified custodians.
The trade formally added its feedback concerning the proposed rule on Might 8, the deadline for submission.
Grewal’s tweets come after Marisa Tashman Coppel, Coverage Counsel for the Blockchain Affiliation, warned on Might 8 that the SEC’s rule change may “drastically curtail” crypto funding.
Grewal stated in a Twitter thread that the trade agrees with the “spirit of the proposal.”
“We’re assured Coinbase Custody Belief Firm will stay a QC even when the proposal is adopted as is.”
Feedback on SEC proposal
In its feedback, amongst different points, Coinbase disagreed with the SEC’s proposition to shift the sorts of banks allowed to function certified custodians to incorporate solely these “topic to Federal regulation and supervision” and believes state belief firms and different state-regulated monetary establishments ought to proceed to be certified custodians.
“The Proposal comprises no coverage rationalization or financial evaluation that may help altering the scope of banks eligible to function certified custodians,” Coinbase famous in its feedback, including that such a rule requires extra reasoning, reviewing options, and cost-benefit evaluation than the proposal offers.
Coinbase additionally believes the proposal requirement by the SEC for RIAs to take care of possession or management of consumer property always is “to justify banning RIA consumer trades on crypto exchanges that aren’t certified custodians and require pre-funding to execute transactions.”
The corporate believes the proposal ought to permit consumer property to briefly go away the certified custodian so advisers can execute and settle trades inside in the future after the transaction. It contends that this restriction on crypto asset buying and selling doesn’t think about the reasoning for crypto exchanges pre-funding transactions or the real-time settlement profit it offers.
Grewal stated in his Twitter thread that:
“[T]his proposal unnecessarily singles out crypto and makes inappropriate assumptions about custodial practices primarily based on securities markets.”
Based on Coinbase, the SEC should implement a “unified possession or management commonplace” that permits customers to carry crypto property at a wider vary of certified custodians. The corporate famous that the proposal in its present type can be detrimental to broker-dealers, holding them to the next custodial commonplace for crypto property than banks and international monetary establishments, and believes broker-dealers ought to custody crypto property underneath the identical necessities as different asset courses.
Coinbase additionally prompt different amendments to the proposal, resembling tailoring indemnification and insurance coverage necessities by asset class and permitting refined buyers to barter custodial preparations.
Grewal ended the thread by saying:
“We respect the prospect to weigh in and we look ahead to partaking with the SEC to get this proper – public rulemaking is a vital step in bringing additional readability to the market.”
Coinbase vs. SEC
Coinbase has been embroiled in a authorized battle with the SEC ever because it obtained a Wells Discover in March. Since then, the trade has repeatedly spoken out in opposition to the SEC’s rules.
The trade not too long ago procured a court docket order that compels the SEC to answer the trade’s mandamus petition that requested the SEC to make use of its rulemaking course of to develop steerage for firms within the crypto business.