Cryptocurrency exchange urges Trump to sack head of regulator

Coinbase Global’s chief legal officer has called for Donald Trump to sack the head of the US Securities and Exchange Commission as Republicans start drawing up a new policy agenda for cryptocurrencies.
Paul Grewal, the legal chief at Coinbase, the largest cryptocurrency exchange in the United States, said: “The current chair of the SEC, Gary Gensler, has led a regulation-by-enforcement campaign against the industry that has been destructive of investor protections and destructive of innovation in ways that we think need to be addressed immediately.”
Crypto leaders, including Grewal, met Republicans in Washington DC last week as the value of leading cryptocurrencies including bitcoin soared on expectations that the industry would have greater political influence than before Trump’s election as the next president of the US.
The incoming administration is “looking to learn more about crypto, the state of crypto legislation and how we can progress things forward”, Grewal said.
“As the new administration is transitioning into office, they, along with other Republicans elected to federal office, have been reaching out to industry participants for views on how best to implement a new crypto policy agenda.”
Coinbase wanted to see “sensible standards for defining what transactions fall within the scope of the federal securities laws”, he said. Digital asset companies have been accused by the SEC of flouting securities laws amid confusion about whether they come into scope. Coinbase also said it wanted clarity on which federal agency was responsible for primary oversight of cryptocurrency regulation. At present it is split between the SEC and the Commodity Futures Trading Commission.
The SEC has accused Coinbase of operating an allegedly illegal securities exchange, which Coinbase denies. The watchdog claims that Coinbase facilitated the trading of at least 13 crypto tokens, including Solana, Cardano and Polygon, which it said should have been registered as securities.
Coinbase argues that crypto assets, unlike stocks and bonds, do not meet that definition of an investment contract, a position held by the vast majority of the crypto industry. The exchange has in turn sued the SEC, urging it to provide clarity on circumstances under which a digital asset is a security and to create a new market structure framework compatible with cryptocurrencies.
The SEC’s pursuit of Coinbase is one of a series of cases against crypto companies launched during the tenure of Gensler, a former Goldman Sachs banker.
Grewal said: “Those cases are each pending and neither is set for a final resolution for several months, but we’re confident that each of those cases will ultimately be resolved in our favour and, together with the change in administration that is imminent, we think it’s a new day for crypto and one that gives us cause for hope on behalf of not just the company but our customers and other stakeholders.”
On the campaign trail in July, Trump told the bitcoin conference in Nashville, Tennessee, that he would fire Gensler on the first day of his second administration. The president-elect promised to make the US the “crypto capital of the planet” and to accumulate a national stockpile of bitcoin. It is not clear how or when the proposals would be implemented.
“I don’t think we’re going to have to wait very long once a new administration takes office for change to come at the SEC and across the federal government as a whole,” Grewal said.
Grewal, a former US magistrate judge for the northern district of California and former deputy general counsel at Facebook, said the focus had been on crypto as an investment opportunity. However, he said Coinbase believed there were opportunities for cryptocurrencies to be used more widely for accessing credit, payments and international money transfer services as an alternative to the existing financial system.
He said: “The vast majority of Americans, like I think the vast majority of people worldwide, feel that the current system doesn’t work for them. They want to see alternatives. They want to see choices in the current financial system and crypto provides that.”
Defending his record on regulating cryptocurrencies, Gensler, 67, said: “This is a field in which over the years there has been significant investor harm. Further, aside from speculative investing and possible use for illicit activities, the vast majority of crypto assets have yet to prove sustainable-use cases.
“Everything we’ve done is focused on ensuring compliance with our laws. What we’ve found since the 1930s is that compliance matters. It protects investors. It builds trust in our capital markets. It helps issuers tap into our markets. History has shown for 90 years that robust securities regulation both creates trust in markets and fosters innovation.”