Coinbase’s Paul Grewal Says Crypto Should Remain Non-Partisan

Grewal is inspired by Asia’s rapid adoption of crypto regulations, but remains optimistic about the US

For crypto policy to be successful in the US, he argued, it needs to be a bipartisan issue that brings two parties together.

The loudest and most thunderous applause at the Bitcoin Nashville conference came from Republican candidate Donald Trump’s promise to fire Securities and Exchange Commission chairman Gary Gensler. Republicans have treated crypto as a pet issue, but Coinbase’s chief legal officer Paul Grewal doesn’t want it to become a partisan issue.

“My number one concern is that crypto will become politicized and become a partisan issue that will threaten to at least slow and perhaps worse, its continued growth and development,” Grewal said in an interview at the Asia Blockchain Summit in Taipei, stressing the need for bipartisan support for policy modernization.

Part of the need for change in the U.S. stems from a reliance on old frameworks like the Howey Test to address the reality of twenty-first-century finance.

“There needs to be an understanding that the Howey Test was developed in the 1940s and 50s in a real estate context in Orange Grove, Florida,” he said, arguing that applying the Howey Test to blockchains and crypto “blindly and mechanically” makes no practical sense.

“Even precedents that come from the Supreme Court have always been accepted as valid in specific contexts and have been told that they need to adapt to new technologies and issues that arise in markets and in the economy more generally,” he said. “It’s important to respect precedents and use the wisdom that has been gained over decades of applying them in all sorts of other contexts without depending on them in a way that doesn’t make practical sense.”

Asia doesn’t have the same stringent restrictions as the Howey test, and Grewal appreciates how regulators wrote the rules from the ground up while listening to feedback from industry.

After all, Hong Kong’s journey to establish its digital asset licensing framework and allow crypto ETF issuers to offer in-kind rebates, which the SEC prohibits, began with an announcement in the fall of 2022 that the city’s authorities were reconsidering their stance on the issue.

“What strikes me most about Asia is the focus on individual issues and almost no focus on ideology,” he said. “There’s an interest in understanding technology, where the industry is going, and our experiences… because they want to learn and take the best while avoiding the worst.”

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In contrast, within the US, it has been difficult to “engage in meaningful dialogue with large parts of government when it comes to crypto and policy,” Grewal opined. However, he remains optimistic about America as both major political parties begin to recognize the importance of crypto.

“Crypto, at the end of the day, is code. There are many other issues that we disagree on in the United States and around the world. We need to be able to agree on what the code does and how it works,” he concludes.