Coinbase pushes for crypto regulatory framework with advocacy group

Coinbase CEO Says He’ll Fight the SEC for the Crypto Industry | WSJ

Crypto exchange Coinbase has launched the Stand With Crypto Alliance, which it describes as America’s first-ever independent advocacy group for the crypto community.

The alliance aims to drive pro-crypto legislation that benefits the broader crypto industry through U.S. Congress. Eventually, it aims to help establish a regulatory framework for digital assets. Currently, crypto advocates and U.S. regulators disagree about how the industry should be regulated.

“[The Alliance] completely embodies exactly what the crypto industry is all about,” said Kara Calvert, head of U.S. policy at Coinbase. “It’s all about decentralized efforts, decentralized power, decentralized access, and that’s, I think, really what this Stand With Crypto movement is about.”

The exchange hosted its inaugural “Stand with Crypto” town hall in New York City on August 3. The event featured a panel discussion with lawmakers and advisors from New York to foster dialogue between the industry and government.

The alliance also acts as an instrument for people who want to learn about Congress. Through a scorecard and a legislative action portal, people can engage with lawmakers — bridging the gap between the crypto community and legislators.

The Stand With Crypto Alliance operates as a 501(c)(4) non-profit under the Internal Revenue Service, which means it is tax-exempt and can engage in political activity. It was inspired by Crypto435, Coinbase’s previous campaign to organize the crypto community around legislative issues.

‘Easy shot to take’

During an X Spaces event, Calvert said that the current discussion around crypto policy in Washington centers around big players and institutions. The alliance hopes to bring new voices and infuse the conversations with fresh perspectives.

“I think a few politicians are seeing crypto as an easy shot to take,” said Faryar Shirzad, chief policy officer at Coinbase, in an interview with CNN Business. “I don’t think they have fully understood the passion and the community behind it.”

The U.S. government has tightened oversight on crypto over the past year, meeting protests from crypto proponents. According to analysts, the collapse of FTX prompted a crackdown on the nascent industry.

Even Coinbase is currently struggling with legal work. The U.S. Securities and Exchange Commission (SEC) argues that most crypto products fall under the class of investment contracts or securities category. The crypto industry disagrees with the assessment.

The disagreement between the two parties escalated when the SEC sued Coinbase and another big crypto exchange, Binance, for allegedly selling unregistered securities. Coinbase is also facing charges for violating broker and clearing regulations.

“I think a few politicians are seeing crypto as an easy shot to take. I don’t think they have fully understood the passion and the community behind it.”

Faryar Shirzad, Coinbase chief policy officer

In support, several groups and individuals, such as Republican Senator Cynthia Lummis and top U.S. law scholars from institutions including Yale and UCLA, filed amicus briefs with the court last week. Shirzad and Coinbase chief legal officer Paul Grewal expressed their gratitude via their X accounts.

Despite the tightening crypto regulation, the community experienced a legislative breakthrough. In a ruling last month, a judge found that Ripple Labs’ native token, XRP, was “not necessarily a security on its face,” unless it was sold to institutional investors.

Analysts say the Ripple ruling will help similar cases win over legislators in the future. However, the SEC has expressed its intention to overturn the ruling.

In addition to the Ripple case, the House Financial Services Committee passed a bipartisan bill that would give the Commodity Futures Trading Commission (CFTC) primary regulatory oversight of cryptocurrencies. The bill will also clarify the SEC’s jurisdiction.