Possible digital asset standards: FTX CEO expressed his thoughts on crypto regulation

FTX CEO Sam Bankman-Fried shared his opinion on how cryptocurrencies should be regulated. A template for the implementation of such standards in practice is also proposed. There is a possibility that the post on Twitter did not appear by accident. The platform and its founder have been under investigation by regulators in Texas recently. There is no better time to state your position. The buidlbee editorial staff retells the details. 

Firstly

Sam Bankman-Fried’s (SBF) main point is that the industry needs regulatory oversight and customer protection. 

“We need to ensure an open, free economy, where peer-to-peer transfers, code, validators, etc. are presumptively free,” he said. 

This means that the industry has blocklists not allowlist for illicit financial activity, which necessitates fast, reliable lists of addresses related to illicit financing. However, peer-to-peer transmissions should generally be free if they are not intended for sanctioned entities. The FTX head believes that this can simultaneously enforce sanctions compliance effectively while also making sure that you don’t need a passport and social security number “to buy a bagel from 7–11.” 

Secondly

The second issue that needs regulation is security. SBF writes that the industry needs something to help reduce the impact of security breaches in crypto hacks. 

To do this, FTX CEO suggests introducing a community standard that would require hackers to return the vast majority of assets and prioritize customer protection in exchange for a settlement. 

Undoubtedly, this is a pressing issue, especially given the interim results for October, when the number of hacks has already surpassed ten. The anti-record has already been broken, and the end of the month is still almost two weeks away.

Thirdly

Sam Bankman-Fried also suggests working on public disclosure and asset transparency. For non-valued securities, the company previously deployed a structure that works with U.S. FTX assets. Read more about this here. 

Fourthly

According to SBF, the next step is to develop a regulatory structure that allows the settlement benefits of blockchain to protect profits made by retail equity investors. Read more about this in the track. 

Fifthly

Once again, it’s about protecting customers. To do this, the FTX CEO proposes developing standards to help inform and protect users from all kinds of threats. At its essence, this means: 

• disclosures;
• safer clearing models;
• suitability based on knowledge, now wealth.

Sixthly

Here we will talk about decentralized finance, an area that Sam Bankman-Fried believes is one of the most difficult areas to properly understand. 

“The most important [thing] is that we not jump the gun: that industry, regulators, and lawmakers work collaboratively and thoughtfully together. But we should make sure that code, peer-to-peer transfers, validators, etc. are free while also ensuring that retail-facing platforms and marketing build in customer protection,” SBF said. 

And the seventh

Cryptocurrency regulation also applies to stablecoins. Earlier in one of the FTX CEO’s threads, he said they make payments better. Now, he said, the industry needs to have regulatory oversight, up-to-date public information, and audits to confirm that dollar-backed stablecoins are, in fact, backed by dollars. More of his thought is voiced below and in the FTX policy. 

 

In conclusion, Sam Bankman-Fried noted that these points are not entirely convenient FTX, but in general, such conditions would be acceptable to all market participants. 

Why does FTX care about regulating cryptocurrencies?

A few days ago, news broke online that regulators in Texas were probing FTX, FTX US, and the exchange’s founder and CEO Sam Bankman-Fried for potential securities violations. 

Regulators are supposedly trying to figure out whether the revenue accounts offered by FTX US should be considered unregistered securities, according to the document, which concerns the bankruptcy proceedings of the Voyager Digital. FTX recently won a tender to acquire the assets of that company, after which the cryptocurrency exchange came under the scrutiny of the relevant authorities. 

How this will end is still unknown, but the editors of buidlbee will follow the situation and keep you informed.