MPs have called for the devolution of Crown Estate functions on condition that Holyrood gives control straight to local communities.
The Commons Scottish Affairs Committee said the body responsible for managing the Crown's property, rights and interests lacks accountability for its marine operations.
The Crown Estate Commission (CEC) manages the seabed out to 200 nautical miles and controls about half the foreshore.
A report published by the committee found "major issues" with the CEC's management but warned that devolving powers to Edinburgh would be "insufficient".
The report added: "Devolution to Holyrood should be conditional upon an agreement between the Secretary of State for Scotland and the Scottish Government on how such a scheme of subsidiarity to local authority and local community levels should be implemented. We recommend the CEC continue to operate as a commercial developer on a UK-wide basis."
The committee decided to hold an inquiry into the Crown Estate's functions after being surprised by the high volume of criticism it received during an earlier investigation. Chairman Ian Davidson MP described an "accountability vacuum" in Scotland, adding: "We visited various communities in Orkney, Shetland, Caithness, Argyll and the Western Isles and took evidence from every interested party we could find.
"Considering the nature and extent of the problems identified to us, almost exclusively in relation to the marine and coastal assets in Scotland, we have had to conclude that the CEC should no longer be the body responsible in these areas. The point is to conserve these assets and maximise the benefits to the island and coastal communities most closely involved with them.
"We are convinced the only way this can be done is by devolving as much of the responsibility - and benefit - down to the level of those local communities as possible."
The CEC is formally accountable to the Treasury, with the UK Government's Scottish Secretary taking the lead for its operations. Revenue from Scotland, through leasing areas of the seabed, could be between £12 and £49 million by 2020, it has been estimated.
The Scottish Government has called for its functions to be devolved to Holyrood as part of the UK Government's Scotland Bill, currently being debated at Westminster.