A nonprofit that deals with digital rights expects Coinbase to be more transparent in the way it handles requests from authorities for users' private financial data.
Civil liberties in the digital world
In a post on its website, the Electronic Frontier Foundation (EFF) argued that the well-known US-based crypto exchange should start releasing regular transparency reports.
In particular, the number of government and law enforcement requests for information that Coinbase receives and how it addresses those requests should be specified, the EFF said.
Financial data is one of the "most sensitive types of information" a user produces, the group continued. Additionally, the EFF suggested that the way Coinbase responds to government requests could "have a huge impact on what kinds of speech thrive online."
Founded in 1990, the EFF is a non-profit organization that aims to defend "civil liberties in the digital world" by supporting user privacy, freedom of expression and grassroots activism.
Cryptocurrency exchanges like Bitcoin Pro they should "especially understand" the importance of privacy, as their users tend to value censorship resistance and anonymity, the EFF said.
Unlike Coinbase, Kraken, a rival US-based crypto exchange, has received high praise for its seemingly transparent behavior regarding government and law enforcement inquiries.
Kraken "has already recognized the importance of being open on this topic," the group said, pointing to a January tweet regarding a 2019 transparency report showing that the US had exceeded the number of inquiries.
Coinbase's policy
Coinbase built its reputation as a trusted platform by emphasizing regulatory compliance from the start. In June, the exchange initiated a series of agreements with a number of US agencies, including the Drug Enforcement Administration and the Internal Revenue Service (IRS), for a cryptocurrency investigation tool called "Coinbase Analytics".
The tool allows you to track transactions conducted on Coinbase, with the IRS stating that the tool possessed "capabilities not currently found in other instruments on the market." At the time, Coinbase said the analysis results were "completely derived from online, publicly available data that does not include personally identifiable information for anyone."
In 2018, Coinbase told 13.000 users that it would share "only a few limited categories of information" following requests from the Internal Revenue Service, although it did not disclose more precise details.
Releasing transparency reports, the EFF said Coinbase could "show leadership" and "fill gaps" in current knowledge "simply by shedding light on government inquiries."
