- Coinbase executive says the Commodity Futures Trading Commission should not be creating enforcement actions against DeFi.
- Brian Armstrong hopes that these protocols take CFTC cases against them to court to establish a precedent.
- Armstrong expressed his confidence in US courts in upholding the rule of the law.
Coinbase CEO Brian Armstrong shared his views on the enforcement actions of the US Commodity Futures Trading Commission (CFTC) against DeFi protocols. Armstrong hopes that protocols take the CFTC to court to fight the enforcement actions.
The CFTC has charged DeFi protocols Opyn, ZeroEx and Deridex for offering allegedly illegal digital asset derivatives trading. The protocols settled the charges with the regulator via monetary settlements.
Also read: XRP price recovers as Ripple CTO foresees buying pressure on the altcoin
Coinbase CEO condemns CFTC enforcement actions on DeFi protocols
Brian Armstrong believes that the CFTC should not be creating enforcement actions against decentralized (DeFi) protocols. Armstrong says that it is highly unlikely that the Commodity Exchange Act even applies to DeFi projects. Rather than acting depressed about the situation, Armstrong extolled US courts for, in his telling, being willing to uphold the rule of the law.
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.
— Brian Armstrong ️ (@brian_armstrong) September 13, 2023
My hope is these DeFi protocols take these cases to court to…
Armstrong is likely referring to CFTC’s recent actions against DeFi protocols Opyn, ZeoEx and Deridex and the subsequent civil monetary penalties of $250,000, $200,000, and $100,000 the protocols paid, respectively.
The CFTC’s stance on DeFi exchanges becomes clear from Enforcement Director Ian McGinley’s speech at a conference hosted by the Practising Law Institute. McGinley said:
The existence of unregulated DeFi exchanges is an obvious threat to the markets regulated and customers protected by the CFTC, and it is one we have taken very seriously.
Armstrong argues that the CFTC does not have regulatory authority over Decentralized Finance protocols and that enforcement actions could push an important industry like DeFi offshore with its enforcement activities.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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