Coinbase’s Top Lawyer Fires Shot at SEC: ’Let Your Staff Own Crypto Already’

SEC’s ethics rules bar employees from holding crypto—but Coinbase’s Chief Legal Officer says that’s outdated nonsense in 2025. Here’s why this fight matters.

The Hypocrisy Hangover

While SEC Chair Gary Gensler still waffles on crypto classification, his own staff can’t touch it without risking their jobs. Coinbase CLO Paul Grewal calls it ’a relic of pre-Bitcoin thinking.’

Regulators Missing the Boat—Again

Banning SEC staff from crypto ownership means the agency’s top talent can’t gain firsthand experience with the assets they regulate. Classic bureaucratic move—prioritizing optics over competence.

The Cynical Kicker

Then again, maybe the SEC just wants to maintain plausible deniability for when their next enforcement action accidentally crashes a token they don’t understand. Banking lobbyists probably prefer it that way.

Grewal Writes to Newly Sworn-In SEC Chair Paul Atkins

Additionally, in a separate letter to the new Securities and Exchange Commission chair, Paul Atkins, he said that the ban on SEC employees from holding crypto is an “impediment to the Task Force’s ability” to aid in the right crypto regulatory recommendations.

“This needs to be corrected immediately,” he wrote in the letter. Grewal added that Coinbase has pressed the OGE to rescind and update Legal Advisory 22-04.

The Legal Advisory, released in 2022, states, “an SEC employee who holds any amount of a cryptocurrency or stablecoin may not participate in a particular matter.”

He also said that this rule is “misguided and damaging to [crypto] regulatory progress.”

In the letter, Grewal told Atkins that the Commission should clarify that certain crypto holdings would not have “a direct and predictable effect on the value of their crypto or stablecoins.”

Most Crypto Activities are Not Securities: Coinbase CLO

Further, he added that the Commission must continuously adapt and build new expertise, given the rapid rise in crypto.

Besides, he noted that most crypto activities are not securities, highlighting the recent SEC reversals on crypto enforcement actions.

“The technology itself is not a security, and securities regulators’ engagements with the technology does not inherently entail conflicts or concerns.”