This effort is the standard playbook for the industry, Kelleher said. “If they can’t capture a regulator to effectively not regulate them, then they shop around for a more friendly one. If you can’t find one that you can control, then you go to Congress and you claim regulators are killing innovation and claim that the U.S. industry will lose out to foreign competitors.”
A similar situation occurred, he said, with financial derivatives in the 1990s. The industry called them an innovation, and Congress restricted the regulation of them, only to later reestablish control after their contribution to the financial crisis.
A new regulator would not be better than the SEC, Kelleher said, and the existing regulatory authority is largely adequate. “Coinbase is the tip of the industry spear to kill as much regulation and oversight as possible,” he said.
One area in Coinbase’s proposal that has promise is its call for a new self-regulatory organization, or SRO, according to Michelle Bond, CEO of the Association for Digital Asset Markets, a group of crypto organizations. Coinbase is not a member.
Such an entity under joint SEC and Commodity Futures Trading Commission jurisdiction could help address one of the biggest questions in the crypto world, determining what is a security and what is a commodity, she said in an interview.