Coinbase CEO Urges Legal Action and Questions CFTC's Approach to DeFi Regulations
Summary:
Coinbase CEO Brian Armstrong endorses decentralized finance (DeFi) protocols, suggesting legal action for establishing a precedent. The US CFTC should refrain from enforcing regulations on DeFi, as it questions whether they fall under the Commodity Exchange Act. DeFi platforms have faced recent enforcement actions for unauthorized trading. Lawmakers like Commissioner Summer Mersinger advocate for transparent regulations rather than hasty enforcement. Increased scrutiny from regulators is impacting cryptocurrency companies.
Coinbase CEO Brian Armstrong has voiced his support for decentralized finance (DeFi) protocols, encouraging them to seek legal action in order to establish a precedent. Armstrong believes that the legal system consistently upholds the rule of law and urges DeFi protocols to consider court proceedings as the current approach pushes the industry towards overseas jurisdictions. He specifically mentions the United States Commodities and Futures Trading Commission (CFTC), stating that they should refrain from taking enforcement measures against DeFi protocols. Armstrong questions whether the Commodity Exchange Act even applies to these protocols since they do not function as traditional financial service businesses.
In the previous week, the CFTC took action against three DeFi companies for their alleged involvement in unauthorized trading of cryptocurrency derivatives. The regulator claims that these platforms facilitated illicit trading without the necessary registration. Apart from Brian Armstrong, some lawmakers have also expressed their support for DeFi protocols. Republican Commissioner Summer Mersinger emphasizes the need for the CFTC to establish transparent regulations for DeFi instead of resorting to enforcement actions hastily. She believes that the commission should prioritize engaging with the public and setting clear guidelines.
The CFTC recently celebrated a legal victory in a case against Ooki DAO, which was operating an illicit trading platform and violating regulatory guidelines. This successful outcome resulted in the closure of Ooki DAO and a fine of over $600,000. Cryptocurrency companies have recently faced increased scrutiny from US regulatory bodies, with investigations initiated against major players like Coinbase and Binance by the Securities and Exchange Commission (SEC).
Published At
9/14/2023 7:18:47 AM
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