Brian Armstrong, co-founder and CEO of Coinbase, thinks the CFTC’s latest DeFi crackdowns may have gone too far.
- The CEO of Coinbase is steadfast in his support of just cryptocurrency regulation.
- The CEO questioned whether DeFi is covered by CEA.
- Armstrong is hoping that DeFi protocols will begin pursuing legal action against the CFTC.
Armstrong’s comments come in the wake of the CFTC’s recent regulatory assault on Opyn, ZeroEx, and Deridex, three well-known DeFi businesses in the United States that were accused of offering unauthorized leveraged and margined retail commodity trades in digital assets.
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DeFi Protocols Must Not Succumb to Pressure
Armstrong remarked that the CFTC should stop targeting DeFi protocols because these companies don’t operate as traditional financial service organizations in a tweet (X) to his over a million followers.
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In particular, the CEO stated that it’s debatable whether the Commodity Exchange Act (CEA) truly applies to DeFi protocols, pointing out that implementing the clause would merely “push an important industry offshore.”
“My hope is these DeFi protocols take these cases to court to establish a precedent. The courts have proven to be very willing to uphold the rule of law,” Armstrong said.
The CEO has been persistent in his advocacy for a clear and objective regulatory regime in the crypto industry. In a previous interview, he slammed the Securities and Exchange Commission (SEC) for its “regulatory ambiguity” and called for a change in leadership in the commission.
Is the CFTC Going Too Far?
The derivatives market watchdog has been criticized before, and Armstrong is not the first to do so for its current enforcement practices.
The CFTC’s enforcement action against Opyn, ZeroEx, and Deridex was the subject of a dissenting statement from Commissioner Summer K. Mersinger on September 7.
“The Commission’s Orders in these cases give no indication that customer funds have been misappropriated or that any market participants have been victimized by the DeFi protocols on which the Commission has unleashed its enforcement powers,” Mersinger said.
Decentralized in conception and operation (DeFi) innovative technology, according to the commissioner, had never been the focus of a CFTC enforcement case before.
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