As governments around the world grapple with whether and how to regulate cryptocurrencies, publicly traded exchange Coinbase seeks to guide policymakers in developing regulations that protect consumers but benefit both institutions and crypto-natives.
“What we’re trying to do is find a path that allows crypto innovation to continue to drive,” said Coinbase Head of US Policy Kara Calvert Decrypt. “We want to make sure that DeFi (decentralized finance) is not killed in its infancy.”
As public awareness of Bitcoin, DeFi and cryptocurrencies took off during the 2016-2017 bull market, regulators have had to catch up and try to apply decades-old laws to new technologies. Many in the area have chafed at government regulations and view know-your-customer (KYC) guidelines as an invasion of privacy that creates honeypots for cybercriminals.
Calvert said the key to easing those concerns is collaboration.
“I think what we need to do is we need to create driving rules,” she said. “One thing the industry as a whole could do a better job of is getting input from the ‘gens’ and DeFi projects to make sure policies work for them and don’t put them in a box or create barriers.”
Launched in 2012, Coinbase, the largest US-based cryptocurrency exchange, went public in 2021. Since then, the company has been under increased regulatory scrutiny.
Calvert says Coinbase welcomes regulation, but that “we just want to make regulation better.” One area of regulation that remains a point of contention for crypto-natives and privacy advocates is KYC policy.
KYC and Anti-Money Laundering (AML) are practices in the financial industry that ensure that a client’s identity can be verified and thus used to prevent or prosecute financial crime.
For example, US banks and regulatory agencies such as the Securities and Exchange Commission (SEC) require customers to provide detailed financial and personal information before opening an investment or bank account – something crypto and DeFi firms traditionally do not do.
“There are some people who won’t be KYC compliant, and they’ll go somewhere else,” Calvert said. “I think it speaks to actually wanting to make it safe for the United States to use crypto, and because of that, there are regulations that will go with that.”
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