Coinbase CEO: Regulate Centralized Operators But Leave DeFi Alone
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Regulation of Centralized Operators
In a blog post published on December 20 by Coinbase, Armstrong discussed the regulation of cryptocurrencies and offered some suggestions for how regulators might be able to establish trust and advance the sector as the market continues to rebound from the harm caused by FTX and its unexpected collapse.
However, the Coinbase CEO highlighted that DeFi protocols are not a factor in that calculation.
Transparency in Cryptographic Proven Method
Armstrong stated that transparency is embedded by default on-chain in a cryptographically proven method and, as such, should be mostly left alone. Decentralized arrangements do not include middlemen, and accessible code and smart contracts are the highest expressions of transparency.
Coinbase CEO expressed hope that FTX's decline will provide the impetus they need to ultimately get new legislation approved, noting that further reporting and accountability checks are required for centralized actors because they involve individuals.
United States to Commence Stablecoin Regulation
Armstrong recommended that the United States begin with stablecoin regulation in accordance with general financial services legislation and that authorities enforce the application of a state trust charter or an OCC national trust charter.
Sen. Bill Hagerty of the United States has now submitted the Stablecoin Transparency Act, anticipated to be approved by the Senate in the upcoming months. In addition to improving consumer protection laws and outlawing market manipulation techniques, the CEO of Coinbase advised that regulators develop a federal licensing and registration scheme to allow exchanges or custodians to legitimately service customers inside that market.