Publicly-traded cryptocurrency company Coinbase is the latest industry participant to introduce a proposed regulatory framework for cryptocurrencies in the United States.
Unveiled on Thursday, the framework is dubbed the Digital Asset Policy Proposal (dApp) and comes as a response to increased regulatory scrutiny into the activities of crypto-related businesses in the country.
In its proposal, Coinbase, among other things, suggests a new definition for cryptocurrencies or so-called digital assets. The recommendation is that digital assets be defined as assets “issued and transferred using distributed ledger or blockchain technology.” The said definition would apply even if the cryptocurrency serves as a “payment instrument, medium of exchange, means of storing value, or otherwise as a financial interest.”
The approach specified by Coinbase is unique as it differs from the current regulatory regime. Under the current purview, the United States Commodity Futures Trading Commission (CFTC) classifies cryptocurrencies like Bitcoin and Ether as commodities, while the Securities and Exchange Commission (SEC) describes most cryptocurrencies as securities.
Another key recommendation by Coinbase is that the United States appoint a single regulator to oversee the cryptocurrency market and companies within the industry. Under the proposed regulations, digital asset marketplaces (a.k.a. cryptocurrency exchanges) would come under a new registration process specified by the new regulatory body.
These would also be allowed to offer what Coinbase described as “the full life cycle of digital asset services,” notably including lending and borrowing of assets. It is worth recalling that Coinbase had to discontinue plans to offer a crypto-based interest product because of a disagreement with the SEC.
The new regulatory agency being proposed by Coinbase would permit the offering of such services, and also be in charge of ensuring that appropriate disclosures are made to crypto investors.
Lastly, the digital asset policy proposal by Coinbase would be based on three core principles. The first is to enhance transparency through disclosures. The second is to protect the industry against fraud and market manipulation, while the third is to promote efficiency and strengthen market resiliency.
Coinbase’s proposal comes less than 24 hours after major crypto venture capital firm Andreessen Horowitz launched a similar effort to shape regulation of cryptocurrencies in the U.S.
Your crypto deserves the best security. Get a Ledger hardware wallet for just $79!