Regulating in the Dark? Coinbase Calls for Lifting Crypto Ban on SEC Employees

Coinbase is calling for a policy shift that could allow staff at the U.S. Securities and Exchange Commission (SEC) to hold and use cryptocurrency — a move the exchange says is crucial for meaningful regulation of the digital asset sector.In a pair of open letters shared on X on April 25, Coinbase Chief Legal Officer Paul Grewal pressed the U.S. Office of Government Ethics (OGE) to repeal an advisory that prohibits SEC personnel from investing in or using cryptocurrencies. The letters were addressed to OGE Acting Director Jamieson Greer and newly appointed SEC Chair Paul Atkins.“To regulate technology, you need to understand it. To understand technology, you need to use it,” Grewal wrote, arguing that hands-on experience with crypto is vital for staff developing regulatory frameworks.Grewal contends that preventing SEC employees from interacting with crypto assets hampers their ability to craft effective policies for a rapidly evolving industry.The current restriction stems from Legal Advisory 22-04, issued by the OGE in July 2022. The advisory classifies crypto assets and stablecoins as non-publicly traded securities, meaning they fall outside existing exemptions that allow federal employees to invest in traditional markets like stocks.Grewal’s letters emphasize that while the SEC’s Crypto Task Force is tasked with shaping regulations for the digital asset sector, its members are barred from directly engaging with the technology they are overseeing. He warned that this disconnect could compromise the quality and practicality of future rulemaking.He further pointed out that under directives from former President Donald Trump, agencies like the SEC are expected to submit updated recommendations on crypto regulation within 90 days — yet key agency staff remain restricted from basic interaction with blockchain technology.Although only the OGE can fully rescind the advisory, Grewal urged the SEC to take interim measures by granting waivers to staff involved in crypto policy work. He argued that allowing limited, controlled use of digital assets would mirror steps taken in other complex regulatory areas.“Granting waivers to task force members would help bridge the gap between innovation and oversight,” Grewal wrote, adding that firsthand knowledge of blockchain systems is critical for crafting workable frameworks.Coinbase’s push comes at a time of transition for the SEC. Former Chair Gary Gensler, who pursued an aggressive regulatory agenda against crypto firms and initiated over 100 enforcement actions, resigned in January 2025.Since Gensler’s departure, the agency has softened its approach, dropping lawsuits against several crypto firms — including a high-profile case involving Coinbase — and signaling its intent to end enforcement actions against blockchain companies such as Dragonchain.Whether the SEC and OGE will adjust their policies remains to be seen. However, Coinbase’s latest move underscores a broader industry push to ensure that those regulating digital assets truly understand the technologies at their core.