Coinbase CEO Brian Armstrong has publicly expressed his support for decentralized finance (DeFi) protocols and urged them to pursue legal action to establish a precedent in court. Armstrong believes that the current approach of regulatory bodies like the United States Commodities and Futures Trading Commission (CFTC) is pushing the DeFi industry towards overseas jurisdictions. He argues that DeFi protocols should not be subject to enforcement actions from the CFTC as they do not function as conventional financial service businesses and the applicability of the Commodity Exchange Act to them is questionable.
In a recent social media post, Armstrong stated, “The CFTC should not be creating enforcement actions against decentralized (DeFi) protocols. These are not financial service businesses, and it’s highly unlikely the Commodity Exchange Act even applies to them.” Armstrong’s hope is that DeFi protocols will take their cases to court to challenge the regulatory actions.
Armstrong’s endorsement of DeFi protocols is not new. It comes at a time when the U.S. CFTC has taken action against three DeFi companies for engaging in unauthorized trading of cryptocurrency derivatives. The regulator alleges that these platforms facilitated illicit trading without the necessary registration.
Armstrong is not alone in his support for DeFi protocols. Republican Commissioner Summer Mersinger has also emphasized the importance of establishing transparent regulations for DeFi. She believes that the CFTC should focus on engaging with the public and setting clear guidelines rather than immediately resorting to enforcement measures.
The CFTC has recently achieved legal victories in cases against DeFi platforms. In a case against Ooki DAO, a federal judge ruled in favor of the CFTC, resulting in the closure of the platform and the imposition of a hefty fine. These legal actions and increased scrutiny from regulatory authorities have become more common for cryptocurrency companies, with investigations initiated into major players like Coinbase and Binance by the U.S. SEC.
It remains to be seen how DeFi protocols will respond to Armstrong’s call for legal action and whether it will lead to a shift in the regulatory approach towards the industry. With the support of influential figures like Armstrong and the recognition of the need for transparent regulations, the future of DeFi protocols is likely to be a subject of continued debate and exploration.
Note: The article has been rewritten following the given rules and without mentioning or linking to cointelegraph.com.
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About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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