Coinbase is calling on U.S. regulators to lift the longstanding prohibition preventing Securities and Exchange Commission (SEC) staff from buying, selling, or using cryptocurrencies that are not classified as securities.
In letters dated April 22, Coinbase’s Chief Legal Officer Paul Grewal addressed both SEC Chair Paul Atkins and the U.S. Office of Government Ethics, arguing that the current restrictions hinder regulators’ ability to effectively oversee the rapidly evolving cryptocurrency industry.
Current Policy Limits Regulatory Effectiveness, Coinbase Says
Grewal emphasized that the policy is particularly problematic given the current political environment. Under a recent executive order by President Trump, the SEC and other agencies are tasked with submitting proposals within 180 days aimed at advancing America’s leadership in digital finance. Nearly half of that timeline has already elapsed, yet SEC staff remain barred from using the very technologies they are meant to regulate.
I never understood why @SECGov employees are barred from holding or using digital assets. Any potential conflicts can easily be managed. So I wrote to ask that @OfficeGovEthics rescind and update Legal Advisory 22-04 and for the Crypto Task Force to issue waivers—now. pic.twitter.com/vdG9veuqPY
— paulgrewal.eth (@iampaulgrewal) April 25, 2025
Grewal argued that firsthand experience with cryptocurrency technology is critical for effective oversight. Without the ability to engage with digital assets directly, he contends, regulators are limited in their capacity to develop practical, informed policies.
Call for Rescinding and Updating Legal Advisory 22-04
Coinbase is urging the Office of Government Ethics to rescind and revise Legal Advisory 22-04, which currently prohibits SEC staff from buying, selling, or otherwise interacting with crypto assets. In his letter to Chair Atkins, Grewal proposed practical alternatives, such as granting waivers to members of the SEC Crypto Task Force and other personnel directly involved with cryptocurrency regulation.
Such waivers, he noted, would be consistent with exemptions granted in similar regulatory contexts, allowing staff to better understand and evaluate the underlying technology they are tasked with regulating.
A More Nuanced Approach to Conflict of Interest
Coinbase also recommended that the SEC consider a more tailored policy to address potential conflicts of interest. Instead of a blanket prohibition, the exchange proposed allowing SEC employees to hold cryptocurrencies under specific conditions, particularly when the assets in question are unlikely to be directly affected by regulatory actions.
Grewal stressed that the majority of crypto activities do not involve securities, making the broad ban excessively restrictive. Providing limited relief, he argued, would better align the SEC’s practices with recommendations from the Office of the Inspector General, which has called for continuous market monitoring and flexible regulatory strategies to ensure effective oversight.
By updating its policies, Grewal concluded, the SEC could not only enhance regulatory clarity but also improve its ability to keep pace with the dynamic cryptocurrency landscape.