Crypto news

Coinbase CEO advocates for DeFi, urges court action for legal clarity.

Coinbase CEO Brian Armstrong has publicly voiced his support for decentralized finance (DeFi) protocols.

In a recent social media update, Armstrong encouraged DeFi platforms to explore legal action in court to establish a legal precedent.

He highlighted that the legal system has consistently demonstrated its commitment to upholding the rule of law.

Armstrong expressed concern that the current regulatory approach is driving the DeFi industry towards jurisdictions outside the United States.

In his post on X (formerly Twitter),

Armstrong specifically suggested that the United States Commodities and Futures Trading Commission (CFTC) should refrain from initiating enforcement actions against DeFi protocols.

He argued that these protocols differ from traditional financial service businesses,

making it questionable whether the Commodity Exchange Act is applicable to them.

By avoiding unnecessary enforcement actions, Armstrong believes the CFTC can foster an environment that encourages innovation and growth in the DeFi space.

During the past week, the United States Commodities and Futures Trading Commission (CFTC) made significant moves against three DeFi companies.

The regulatory body took action against these firms, accusing them of participating in unauthorized trading of cryptocurrency derivatives.

According to the CFTC, these platforms facilitated the illicit trading of crypto derivatives without obtaining the required registration.

The regulatory action highlights the CFTC’s commitment to enforcing compliance and ensuring the proper functioning of the cryptocurrency derivatives market.

In addition to CoinBase, Lawmakers and CFTC Commissioner Advocate for Transparent DeFi Regulations

Alongside Armstrong’s support for DeFi protocols, several lawmakers have also expressed their backing.

CFTC Commissioner Summer Mersinger emphasized the importance of the CFTC focusing on transparent regulations for DeFi rather than relying solely on enforcement actions.

Mersinger voiced concerns that the commission’s current approach seems to lean towards enforcement, whereas she believes engaging with the public and establishing clear guidelines should take precedence.

The U.S. CFTC recently achieved a significant legal victory in a case involving Ooki DAO.

The company was found guilty of operating an illicit trading platform and violating other regulatory guidelines.

In June 2023, a federal judge ruled in favor of the CFTC, resulting in the closure of Ooki DAO and the imposition of a substantial fine exceeding $600,000.

Cryptocurrency companies have faced heightened scrutiny from U.S. regulatory authorities in recent months.

Notably, regulatory bodies like the U.S. Securities and Exchange Commission (SEC) have initiated investigations into prominent industry players, including Coinbase and Binance.

This increased regulatory scrutiny reflects the authorities’ efforts to ensure compliance and protect investors in the rapidly evolving cryptocurrency landscape.

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