Armstrong said that’s what regulators need to focus on first, because centralized exchanges and depositories pose the greatest risk of harming consumers.
Coinbase CEO Brian Armstrong has pushed for tougher regulations for centralized crypto readers, but says decentralized protocols should be allowed to thrive because open-source code and smart contracts are “the ultimate form of disclosure”.
Armstrong shared his views on cryptocurrency regulation in a Dec. 20 Coinbase blog, in which he suggested how regulators can help “restore confidence” and move the industry forward as the market continues to grow. recover from the damage caused by FTX and its brutal fall.
But decentralized protocols are not part of this equation, the CEO of Coinbase pointed out.
“Decentralized deals don’t involve intermediaries [and] open source code and smart contracts are ‘the ultimate form of disclosure,'” Armstrong explained, adding that the chain has ‘the default built-in transparency’ of a ” cryptographically provable way. ‘ and should therefore be largely left out.
Coinbase’s CEO said centralized players would need “additional transparency and disclosure checks” because people are involved, and Armstrong hopes the fall of FTX “will be the catalyst we need to finally embrace a new legislation”. “.
Exchanges, custodians, and stablecoin issuers are “where we’ve seen the greatest risk of harm to consumers, and just about everyone can agree that [this regulation] should be enforced,” he said. he adds.
Armstrong advised the United States to begin regulating stablecoins under standard financial services laws and suggested that regulators mandate the implementation of a state trust charter or trust charter national of the OCC.
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As of this writing, US Senator Bill Hagerty has introduced the Stablecoin Transparency Act, which is expected to enter the Senate in the coming months.
Armstrong added that stablecoin issuers shouldn’t be banks unless they want minimum reserves or invest in riskier assets, but issuers should still meet “basic cybersecurity standards” and implement places a blacklisting process to meet sanctions requirements.
Once stablecoin regulations are clear, Armstrong suggests regulators target cryptocurrency exchanges and custodians.
The Coinbase CEO suggested that regulators implement a federal licensing and registration system to allow exchanges or custodians to legally serve people in this market, in addition to strengthening consumer protection rules and prohibit market manipulation tactics.
With respect to commodities and securities, Armstrong acknowledged that while the courts are still figuring it out, he suggested that the U.S. Congressional Commodities Futures Trading Commission (CFTC) and Securities Exchange Commission (SEC ) should require each of the top 100 cryptocurrencies to be classified by market capitalization as securities or commodities.
“If issuers of assets disagree with the analysis, courts can settle extreme cases, but it would serve as an important set of reported data for the rest of the industry to follow as millions of crypto assets are ultimately created,” he said.
Related: DeFi Regulation: Where US Regulators Should Draw the Line
Given the international reach of cryptocurrency-based businesses, Armstrong also urged regulators in all countries to look beyond what is happening in the domestic market and consider the impact that a foreign business might have. could have on its citizens.
“If you are a country that is going to issue laws that all cryptocurrency businesses must follow, then not only do you need to enforce them domestically, but you also need to enforce them in overseas businesses that serve your citizens. “, said Armstrong, adding:
“Don’t believe the word of this company. Actually check if they are targeting your citizens while pretending not to.
“If you don’t have the power to prevent these activities […] you will inadvertently encourage companies to serve your country overseas,” Armstrong explained, adding that “several billions of