Coinbase has urged the U.S. Office of Government Ethics (OGE) to reconsider a rule that prohibits Securities and Exchange Commission (SEC) staff from holding cryptocurrency. According to Coinbase's Chief Legal Officer, Paul Grewal, this rule hinders the ability of SEC staff to fully understand how crypto works and, consequently, impedes their capacity to regulate it effectively.

In open letters sent to OGE acting director Jamieson Greer and SEC Chair Paul Atkins on April 25, Grewal argued that, to properly regulate technology, regulators need to understand it firsthand. This understanding, Grewal emphasized, can only be achieved by using the technology—cryptocurrency in this case. He also suggested that allowing SEC staff to hold and use crypto would enable them to develop the necessary expertise to propose and implement meaningful regulations for digital securities.

Currently, SEC staff are restricted from buying, selling, or using cryptocurrency and stablecoins under an advisory issued by the OGE in July 2022. This rule was established because cryptocurrencies are not classified as “publicly traded securities” and do not meet the exceptions afforded to stocks.

Grewal pointed out that U.S. President Donald Trump had previously directed the SEC and other agencies to submit crypto regulation recommendations. However, with staff still unable to engage with the technology, this hampers their ability to develop effective regulatory measures.

While the decision to lift the advisory ultimately lies with the OGE, Grewal believes the SEC itself should take action. Specifically, he suggested that the SEC issue waivers to members of its Crypto Task Force and others working on crypto-related matters, aligning with precedents where waivers were granted in similar advisory contexts.