Coinbase Responds to SEC’s Request for Information with 36 Proposals

Coinbase has submitted a response to Commissioner Peirce’s
request for information, marking a development in regulatory discussions
surrounding digital assets.

This follows over two and a half years of engagement,
starting with Coinbase’s initial petition for rulemaking. The company
emphasizes the need for cooperation among industry participants, regulators,
and lawmakers to ensure the proper integration of digital assets into the
financial system.

Recent Regulatory Shifts in the US

In recent months, the regulatory landscape for crypto in the
United States has seen notable changes. The President has signed Executive
Orders to advance American leadership in digital assets and invited crypto
leaders to the White House. Concurrently, Congress is working on legislation
related to stablecoins and a broader framework for digital asset regulation.

The SEC has also launched a crypto Task Force, focusing on modernizing
securities markets to allow digital asset innovation and provide clarity to market
participants. These developments have long been anticipated by the industry,
including Coinbase.

🚨Coinbase has responded to SEC Commissioner Peirce’s request for industry input on digital asset regulation. In the response, they outline 4 key recommendations:1️⃣ Defining digital commodities vs. securities2️⃣ Clarifying secondary market rules for digital commodities3️⃣… pic.twitter.com/a3eWJSF8bO

— CryptoPotato Official (@Crypto_Potato) March 20, 2025

Engagement with the SEC and Industry Stakeholders

In its response, Coinbase commends the SEC for its efforts
to engage with stakeholders and move toward a more defined regulatory
framework. Coinbase has already participated in productive discussions with the
SEC Task Force and other regulatory staff. The company views this as a
promising sign for future cooperation.

Coinbase emphasizes that this process
will be iterative, requiring ongoing dialogue to resolve the numerous questions
still surrounding the regulation of digital assets.

Key Recommendations for SEC Regulation

Coinbase’s response includes 36 specific recommendations
aimed at helping the SEC create a more effective regulatory framework for
digital assets.

Clear Taxonomy for Digital Commodities vs. Securities

One of Coinbase’s primary recommendations is to establish a
clear distinction between digital commodities and securities. Digital assets
that do not confer rights to a business should be classified as digital
commodities, rather than securities. This distinction would reduce confusion in
the market and provide the necessary clarity.

Secondary Market Sales of Digital Commodities

Coinbase argues that secondary market sales of digital
commodities should not be considered securities transactions. By clarifying the
SEC’s jurisdiction over such sales, the industry could avoid unnecessary
regulatory burdens, allowing it to progress more smoothly.

Today we charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency and for failing to register the offer and sale of its crypto asset staking-as-a-service program.https://t.co/XPG2gDkxtV pic.twitter.com/hCdVMw8B2v

— U.S. Securities and Exchange Commission (@SECGov) June 6, 2023

Deferring to Congress for Broader Market Framework

Coinbase calls on the SEC to work with Congress to create a
comprehensive market framework for digital assets. While the SEC has an
important role in establishing guidelines, Coinbase suggests that Congress
should handle the broader regulatory decisions, particularly where ambiguities
remain.

Unlocking Potential of Tokenized Securities

Coinbase advocates for targeted regulatory relief that
recognizes the opportunities blockchain technology offers in simplifying
markets. The company highlights tokenized debt, equity, and investment funds as
key areas for growth. Regulatory clarity around issues like real-time
settlement, self-custody, and asset transfers could unlock a new market for
tokenized securities in the US.

A Collaborative Path Forward

The response from Coinbase reflects the company’s commitment
to fostering a transparent and collaborative regulatory process. Coinbase
believes that by addressing key issues like the classification of digital
commodities and enabling innovation in tokenized securities, the SEC can create
an environment that supports both market participants and investors.

The Role of Traditional Financial Institutions

Coinbase stresses the importance of engagement from
all stakeholders, including traditional financial institutions like banks and
asset managers. Many of these entities are keen to incorporate blockchain
technology into their services.

Coinbase recognizes the significant role
grassroots advocacy has played in bringing crypto issues to the national policy
agenda and encourages continued public participation in the regulatory process.

This article was written by Tareq Sikder at www.financemagnates.com.