In a policy paper released yesterday, US crypto exchange Coinbase laid out a proposal for how the US government should go about regulating the market. It warned that the US risked falling even further behind other countries upon failure to appropriately regulate. This comes a day after Coinbase investor Andreessen Horowitz made a similar proposal.
Slight differences between Coinbase and a16z visions
A16z, which is how Andreessen Horowitz’s VC firm is known, advocates cooperation across regulators, while Coinbase lends greater focus to digital assets. The exchange believes digital asset markets should be regulated by a single entity.
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Coinbase Chief Policy Officer Faryar Shirzad said in an interview with CNBC:
We started where a lot of people start, which is taking the existing multiplicity of regulators and trying to figure out what minimal surgery you could do to make things work. And then there was a point at which, maybe three to four weeks ago, where we just kind of looked at each other [and] we said it takes more effort to try to adapt the current system which is predicated on an old market structure — more intellectual effort, I would say — than it does starting from scratch.
Shirzad added that Coinbase had already met with some legislators to discuss aspects of the proposal and feedback had been positive.
Coinbase wrote in the policy report:
Absent taking similar steps (to the unified approach to digital assets taken by the U.K., European Union and Singapore), the United States is at risk of becoming a taker of regulation as opposed to the primary shaper of modern financial services — a position the United States has long occupied.
Coinbase proposes four regulation pillars
Coinbase’s suggestions are classified into four major categories. The first two are promoting fair competition and interoperability between products and giving a new single government authority the responsibility to regulate digital markets. This is in addition to a self-regulating nongovernment body, not unlike that which exists in conventional markets.
The third pillar is to create a new, separate framework for regulating digital assets. It should be distinct from that for traditional finance. Finally, digital asset holders must be protected from market manipulation and fraud.
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