Dan Gallagher, general counsel for the Robinhood trading platform, called Coinbase’s proposal to create a separate agency to regulate cryptocurrencies “a stupid idea.”
In October, the American exchange Coinbase published a document called “Digital Asset Policy Proposal”, which outlined possible approaches to regulating the industry. Coinbase believes that the Securities and Exchange Commission (SEC) and the United States Commodity Futures Trading Commission (CFTC) are adopting outdated methods that are appropriate for controlling traditional finance, not cryptocurrencies. So to avoid “piecemeal” regulatory oversight of the industry, Coinbase has proposed creating an independent body that will focus exclusively on digital assets.
However, Robinhood’s chief attorney, Dan Gallagher, strongly disagrees with the idea. At a conference on financial markets hosted by Georgetown University, Gallagher called it “one of the stupidest things he’s heard in a while,” according to Decrypt. Previously, Gallagher served as SEC Commissioner under the administration of former US President Barack Obama.
Gallagher mentioned the Dodd Frank Act, passed in the aftermath of the 2008-2009 crisis to mitigate the risks of the financial system. Dodd Frank tried to limit the number of federal agencies to ensure regulatory clarity, but several agencies eventually emerged. This led to even more confusion in the distribution of their powers, so there is no point in creating another regulator, the lawyer noted.
“The SEC and CFTC will not be able to fully transfer powers to the new regulator, and these attempts will be unsuccessful. It will only add another chef to the kitchen, ”Gallagher said.
A Coinbase spokesman responded that the exchange is calling for the creation of not a new regulator, but a department that will put forward proposals to oversee the cryptocurrency industry and will not apply outdated methods to it, independently of the SEC and CFTC. Coinbase has expressed its willingness to discuss other specific ideas to help improve current regulations affecting digital assets.
Recently, Ripple has also proposed an approach to regulating the blockchain and cryptocurrency industry. Ripple announced the need for regulators to interact with participants in the cryptocurrency market and create regulatory sandboxes.
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