Coinbase’s Chief legal officer talks about developments in regulatory landscape

• Coinbase’s Chief Legal Officer Paul Grewal discussed the regulatory landscape in crypto.
• Grewal highlighted the national security implications of the regulator’s current stance on crypto.

Paul Grewal, the Chief Legal Officer of Coinbase, recently appeared in an episode of Unchained Podcast hosted by popular crypto influencer Laura Shin.

The podcast, which also featured Polygon Labs’ Chief Policy Officer Rebecca Retig, touched upon several topics like the current regulatory landscape in the United States and the enforcement actions initiated by U.S. regulators. 

Coinbase’s staking products are very different from Kraken’s

According to Grewal, the recent regulatory crackdown that saw multiple crypto firms like Paxos and Kraken subjected to enforcement actions was the result of the prolonged market downturn combined with the string of scandals and bankruptcies in the crypto market throughout 2022.

Speaking on the potential implications of the SEC’s $30 million settlement with Kraken that saw the latter’s staking program shut down in the United States, the Coinbase executive stated that the settlement had no binding precedential effect, with essentially nothing being proven in a court of law.

According to him, the settlement gave very little insight into the law that the SEC used to initiate the enforcement action against Kraken’s staking program.

He reiterated that Kraken’s staking products were very different from the staking features offered by other platforms, including Coinbase.

He clarified that when it comes to Coinbase’s staking products, there’s no question about who owns the assets, stating that the title of the staked assets always remains with the customer.

Furthermore, the staking rewards in Coinbase were set by the network, with no discretion from the platform whatsoever.

Implications of hostile regulation on US’s national security

Grewal also highlighted the implications of the SEC’s actions on the National Security of the United States, likening the matter to the semiconductor industry that is currently being incentivized to return to the U.S. He added, 

“I’d hate to see innovations that were either originally or largely developed here in the united states pushed offshore, and for the country in 30 years to be spending even more money to try to lure that industry back after it had a tremendous record of success in other markets.” 

Polygon Chief Policy agreed with Grewal, adding that if lawmakers and regulators don’t take blockchain technology seriously from an innovation perspective, it may compromise the country’s national security to some degree.