On Oct. 20, FTX CEO Sam Bankman-Fried (SBF) shared his thoughts on what he believes is required for successful crypto regulations. He posted a lengthy document on the FTX Policy website that includes a draft proposal for a set of industry standards.
According to SBF, a high level of regulatory oversight and customer protection is required, and the crypto space must ensure an open, free economy in which peer-to-peer transfers, code, validators, and so on are presumptively free. They could be implemented to “create clarity and protect customers while waiting for full federal regulatory regimes,” according to the proposal.
SBF’s Suggestions appear to revert DeFi to traditional finance, stating that DeFi must comply with the Office of Foreign Assets Control, a government agency within the United States Department of the Treasury that administers and enforces economic sanctions based on US foreign policy.
For illicit financial activities, the FTX CEO believes that “blocklists” rather than “allowlists” should be used. He stated that reliable lists of illicit addresses are necessary, but peer-to-peer transactions should be free, providing they don’t involve sanctioned entities.
Maintaining a blocklist is a good balance: prohibiting illegal transfers and freezing funds associated with financial crimes while otherwise allowing commerce.
To mitigate the impact of crypto security breaches and hacks, , SBF proposes a community standard requiring attackers to return the vast majority of assets and prioritize customer protection in exchange for resolving the dispute. He also stated that “public disclosures and asset transparency” should be worked on.
He went on to say that retail-facing platforms and marketing should include customer protection. Stablecoins require regulatory oversight and “up-to-date public information and audits to confirm that dollar-backed stablecoins are, in fact, backed by the dollar.”
His suggestions, however, did not sit well with the crypto community. Some believe that his suggestions are aimed at transforming a technology that has the potential to revolutionise the financial system into the existing system.
One of them responds:
SBF is blatantly trying to kill DeFi and decentralization in general. SBF, FTX, and Alameda have repeatedly demonstrated that their sole purpose is to extract as much value as possible out of crypto with zero regard for its development. Start treating them with zero respect.