Robinhood Legal Chief Slams Coinbase’s Call for New Digital Asset Regulator

Gallagher’s Strong Words on Regulation

At a recent conference, Dan Gallagher, Robinhood’s chief legal officer, made waves by calling the idea of establishing a new regulator for digital assets “just plain silly.” Attendees at the Georgetown University Financial Markets Quality Conference were treated to an enlightening discussion on the current regulatory landscape of digital assets, and Gallagher didn’t hold back.

The Dreaded Alphabet Soup of Agencies

Gallagher argued that adding yet another agency to the already confusing mix of regulatory bodies, often referred to as the “alphabet soup of Washington,” would be unproductive. He raised a point that’s been a hot topic: why shift authority from the SEC and CFTC to create a new entity? It’s an idea that he characterized as “one of the stupidest I’ve heard in a long time.”

Regulatory Fragmentation

Coinbase’s chief policy officer, Faryar Shirzad, had proposed a new federal regulator back in October, claiming that multiple agencies lead to fragmented oversight. Gallagher, without mentioning Coinbase by name, implied that such fragmentation only complicates matters further.

Conservative Approach from Robinhood

Unlike Coinbase, which supports a staggering 51 cryptocurrencies, Gallagher mentioned Robinhood’s more prudent approach by only supporting seven. “We have to be very careful and deliberate,” he emphasized. “You can’t just be taking on new coins if by the next day some regulator is going to call them a security.”

The Tense Regulatory Climate

The regulatory environment for digital assets is currently a tangled web of rules and regulations. Both the SEC and CFTC are involved, and there’s ongoing debate about how cryptocurrencies should be classified—are they securities, commodities, or something in between? Gallagher noted the urgency for regulatory clarity, which has so far remained elusive.

A Call for Collaboration

Instead of creating an additional layer of oversight, Gallagher proposed a more collaborative strategy. He suggested existing authorities like the SEC, CFTC, and FINRA need to work together to craft a “light touch” regime that accommodates the unique characteristics of digital assets.

Conclusion: Moving Forward

In closing, Gallagher captured the spirit of the conversation, emphasizing that while exploring new technology is essential, it’s equally important to tread carefully within the existing regulatory framework. The digital asset space is evolving rapidly, and clear guidance from existing regulators could do wonders for market participants—without throwing more spaghetti against the wall in the form of new agencies.