The CEO of Coinbase argues that smart contracts should not be regulated the same as centralized custodians.
In a recent post, Coinbase CEO Brian Armstrong shared a “realistic blueprint” for regulating cryptocurrencies and regaining trust in the industry following the collapse of FTX.
1/ I often get asked: “What does regulatory clarity actually look like for crypto?” So I outlined a realistic blueprint for this that regulates centralized actors, while preserving decentralized innovation. https://t.co/sYsNR7igVQ
— Brian Armstrong 🛡️ (@brian_armstrong) December 20, 2022
Financial authorities shouldn’t intervene in this situation for decentralized crypto goods like decentralized financing (DeFi), decentralized autonomous organizations (DAOs), and self-custodial wallets since “transparency are built in by default” in these products, he claimed.
Decentralized protocols should be viewed as being akin to “open source code,” and self-custodial wallets should be regarded as “software companies.”
7/ Lastly, I call out that the decentralized aspects of crypto present an opportunity to create even stronger consumer protections by increasing transparency and removing the middleman via self-custodial wallets, public and open smart contracts, and on-chain accounting.
— Brian Armstrong 🛡️ (@brian_armstrong) December 20, 2022
The CEO of Coinbase stated that decentralized stablecoins are a “good place to start” in efforts to regulate the sector.
By declaring themselves to be a state trust or holding an OCC national trust license, stablecoin issuers might be subject to regulation under “ordinary financial services regulations.” This would necessitate that these companies keep assets in a 1:1 ratio with a focus on treasuries and other high-quality assets.
Armstrong argued for the need for stablecoin issuers to comply with a number of standards, including yearly audits, SOC compliance, and a “blacklist capacity to fulfill sanctions requirements.”
He emphasized the need for greater clarification regarding which assets in the cryptocurrency market are commodities and which are securities after controlling stablecoins.
“Perhaps the most complex point that needs clarity is around which crypto assets are commodities and which are securities. The CFTC and SEC have been debating this issue in the U.S. for several years now, but unfortunately, they haven’t provided any clarity to the market,” wrote Armstrong.
The CEO of Coinbase urged Congress to intervene and enact legislation that would use a modified Howey test to categorize cryptocurrencies.
9/ I'm optimistic that we can make significant progress on the above in 2023 and get crypto legislation passed. Coinbase will be working hard to help make this happen, please get in touch if you're a policy maker who would like to see more clarity of crypto regulation.
— Brian Armstrong 🛡️ (@brian_armstrong) December 20, 2022