Coinbase CEO Brian Armstrong addressed cryptocurrency regulation in a blog post published on December 20th, in which he proposed how regulators can help “restore trust” and move the industry forward as the market recovers from the damage caused by the FTX collapse.
8/ To get there we need to preserve the innovation potential of this technology. Regulation should focus on intermediaries (the centralized actors in cryptocurrency), where additional transparency and disclosure is needed.
— Brian Armstrong (@brian_armstrong) December 20, 2022
Armstrong outlined a realistic blueprint for regulating centralized actors while preserving decentralized innovation, as well as steps for where he believes the industry can go.
These are fairly simple steps, but it will require us all to move forward together, as companies, policymakers, regulators, and customers. We should pursue early, relatively easy, wins passing new legislation instead of waiting to get something comprehensive and perfect, he said.
Armstrong said that regulation should begin with centralized actors such as stablecoin issuers, exchanges, and custodians, as these are the major source of consumer risk.
He noted that traditional finance regulation is structured to ensure that intermediaries operate fairly and properly and that the same principle applies to crypto when there are intermediaries.
Armstrong suggested that the United States begin with stablecoin regulation in accordance with standard financial services laws and that regulators enforce the implementation of a state trust charter or an OCC national trust charter.
According to Armstrong, countries that have implemented laws to govern cryptocurrency-related business operations should enforce them domestically and ensure that companies abroad serving their citizens comply.
The Coinbase CEO also suggested that a set of rules for centralized exchanges and custodians can help prevent bad behaviour while preserving innovation.
In terms of commodities and securities, Armstrong acknowledged that the courts are still figuring things out, but he proposed that the US Congress require the Commodities Futures Trading Commission (CFTC) and the Securities Exchange Commission (SEC) to classify each of the top 100 cryptocurrencies by market cap as either securities or commodities.
Amstrong went on to say that the decentralized nature of cryptocurrency provides an opportunity to create even stronger consumer protections by increasing transparency and removing the middleman through self-custodial wallets, public and open smart contracts, and on-chain accounting.
Armstrong stated that he remains optimistic that significant legislative progress can be made in 2023. “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.” Coinbase CEO added in his tweet.
