Coinbase made a big splash on Thursday as they released a blog post announcing their Digital Asset Policy Proposal. Brian Armstrong wrote an op/ed in the Wall Street Journal on Friday on the same topic. 

According to the Coinbase blog post, “We hope this document will animate an open and constructive discussion regarding the role of digital assets in our shared economic future. Our goal is to thoughtfully and respectfully engage in the debate, and to offer good-faith suggestions…”

Coinbase is offering four suggestions (the blog post calls them pillars):

• Regulate Digital Assets Under a Separate Framework

1. 1. 1. Our financial regulatory system is predicated on…a series of separate financial market intermediaries – exchanges, transfer agents, clearing houses, custodians, and traditional brokers – because it never contemplated that distributed ledger and blockchain technology could exist. 
      2. A new framework for how we regulate digital assets will ensure that innovation can occur in ways that are not hampered by the difficulty of transitioning from our legacy market structure.

• Designate One Regulator for Digital Asset Markets

1. 1. 1. (This) authority would include a new registration process established for entities that serve as marketplaces for digital assets (MDAs) and an appropriate disclosure regime to inform purchasers of digital assets. 
      2. Platforms and services that do not custody or otherwise control the assets of a customer — including miners, stakers and developers — would need to be treated differently.

• Protect and Empower Holders of Digital Assets

1. 1. 1. This new framework should have three goals to ensure holders of digital assets are empowered and protected:
         1. Enhance transparency through appropriate disclosure requirements,
         2. Protect against fraud and market manipulation, and
         3. Promote efficiency and strengthen market resiliency.

• Promote Interoperability and Fair Competition

1. 1. To realize the full potential of digital assets, MDAs must be interoperable with products and services across the (digital) economy. 
   2. If fully realized, this can enshrine fair competition, responsible innovation, and promote a thriving consumer and developer ecosystem.

 

In the WSJ op/ed, Mr. Armstrong says, 

“(These suggestions aren’t) only about my company. Coinbase arguably benefits from an unclear regulatory environment…Our policy proposal is about enabling more crypto startups, getting the average consumer access to better financial services, and helping America stay at the forefront of innovation, entrepreneurship, and technology.” 

 

Why is Coinbase bringing up the topic of digital currency regulation? Two reasons: 

1. “Laws drafted in the 1930s to facilitate effective oversight of our financial system could not contemplate this technological revolution…Not only are some of the financial rules of a paper-based system obsolete, but they are also an encumbrance to innovation, inclusion, and social welfare.”
2. Mr. Armstrong and Coinbase want to “get out in front” of the discussion regarding digital currency regulation. With today’s excessive political posturing, there will be a number of people who will use the debate on digital assets to further their career. By framing the topics early in the discussion, Coinbase is working to help politicians focus on what’s best for the industry. 

 

Cloud Rush salutes Coinbase and Mr. Armstrong for starting the discussion on digital asset regulations. 

 

What are your thoughts? Coinbase has created a Github page with information and a discussion page. Please click on the link to add your voice to the discussion. And, if you would, please email us so we can know your thoughts as well. 

 

Disclaimer: This blog is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.