Coinbase CEO Supports DeFi Protocols After CFTC’s Enforcement Action

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The increas­ing enforce­ment actions against decen­tral­ized finance (DeFi) pro­to­cols are unpleas­ant and U.S. reg­u­la­tors should refrain from it, Coin­base CEO was seen to give such state­ments. The state­ment from the cryp­to exchange exec­u­tive came in the wake of retal­i­at­ing recent action of CFTC against sev­er­al DeFi protocols. 

In an X (Twit­ter) post on Sep­tem­ber 14, co-founder and chief exec­u­tive offi­cer at cryp­to exchange Coin­base, Bri­an Arm­strong, crit­i­cized the enforce­ment actions of the Com­mod­i­ty and Futures Trade Com­mis­sion (CFTC). He argued that the decen­tral­ized finance pro­to­cols are not sim­i­lar to tra­di­tion­al finan­cial ser­vice businesses. 

Giv­en DeFi’s dis­sim­i­lar­i­ty with the finan­cial busi­ness­es, it does not make sense to apply the same to the Com­mod­i­ty Exchange Act, Arm­strong added. 

The U.S. CFTC report­ed to take enforce­ment actions against three decen­tral­ized finance pro­to­cols. The reg­u­la­tor stat­ed in the press release to set­tle with ZeroEx, Opyn, and Deridex by impos­ing fines on the protocols. 

The com­mod­i­ty reg­u­la­tor imposed a penal­ty worth $200,000 on ZeroEx, $250,000 on Opyn, and a $100,000 fine on Deridex. 

Accord­ing to the reg­u­la­tor, all three enti­ties were alleged­ly involved in lever­aged and mar­gin retail com­mod­i­ty trans­ac­tions offer­ing. The reg­u­la­tor cit­ed it as ille­gal since it involves use of cryp­tocur­ren­cies. While Deridex and Opyn were also accused of not reg­is­ter­ing with the reg­u­la­tor before pro­vid­ing ser­vices includ­ing swap exec­u­tive facil­i­ty and as future com­mis­sion mer­chants. Addi­tion­al­ly, the firms did not even apply to the cus­tomer iden­ti­fi­ca­tion program. 

Coinbase CEO Suggests to Seek Court’s Intervention

Bri­an Arm­strong believes that DeFi pro­to­cols can take legal action against reg­u­la­to­ry enforce­ment. Coin­base exec­u­tive looks at the court’s inter­ven­tion opti­misti­cal­ly giv­en the recent orders in favor of cryp­to enti­ties which he believes “uphold rule of law.”

Oth­er­wise, such actions against the firms in the cryp­to indus­try force them to look off­shore to move out their oper­a­tions from the Unit­ed States, Arm­strong added. 

Armstrong Thinks Crypto to Play Vital Role in 2024 Elections

Coin­base CEO Bri­an Arm­strong believes that the cryp­tocur­ren­cy user com­mu­ni­ty will exert sig­nif­i­cant influ­ence in the 2024 pres­i­den­tial elec­tion. He antic­i­pates that vot­ers will inquire about can­di­dates’ posi­tions on cryp­tocur­ren­cy before select­ing them as future leaders. 

Arm­strong also dis­cussed the state of cryp­to reg­u­la­tions, inno­va­tions, and devel­op­ments with­in the cryp­to exchange indus­try in the Unit­ed States dur­ing the interview.

Dur­ing the inter­view, Coin­base CEO empha­sized that cryp­tocur­ren­cy will play a vital role in the upcom­ing elections.

Accord­ing to Coin­base CEO, peo­ple will inquire if elec­tion can­di­dates plan to main­tain the cur­rent “unnec­es­sar­i­ly hos­tile” reg­u­la­tions or cre­ate a favor­able envi­ron­ment for tech­nol­o­gy. The can­di­dates’ stance on fos­ter­ing a facil­i­ta­tive envi­ron­ment for tech­no­log­i­cal inno­va­tion will be a sig­nif­i­cant issue in deter­min­ing whether the coun­try can main­tain its sta­tus as a lead­ing tech­nol­o­gy hub or not.

Nancy J. Allen
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