Coinbase CEO Brian Armstrong lays out what he thinks is a “realistic blueprint” for future crypto regulations in the US and abroad.
Armstrong says in a new blog post that policymakers should start by regulating and providing clarity for centralized entities and start that process by regulating stablecoin issuers.
CEO says companies don’t need to be banks to issue stablecoins, but could register as government trust or OCC [Office of the Comptroller of the Currency] national trust charter.
It also believes they should undergo “rigorous” annual audits, establish board controls and governance, meet basic cybersecurity standards and have the ability to be blacklisted for sanctions.
Next, Armstrong thinks regulators should move on to exchanges and custodians. He believes that policymakers should implement strong know-your-customer (KYC) and anti-money laundering (AML) policies, establish a federal licensing and registration regime, require strong consumer protection rules, create minimum standards of protection and prohibit various forms of market misconduct. .
He also believes that regulators need to clarify what crypto assets are securities and what are commodities.
Next, Armstrong says it’s critical for regulators to ensure a level playing field for everyone.
“This means that if you are a country that is going to publish laws that all cryptocurrency companies must follow, then you must enforce them not only domestically, but also with companies abroad that serve your citizens. Don’t take that company’s word for it.
Actually go check if they are targeting your citizens when they claim they are not. If you don’t have the authority to prevent that activity, you will have to cooperate with international police forces.”
He also believes that regulators should allow decentralized crypto projects to remain innovative because they can ensure user protection on their own. The CEO notes that self-hosted wallets, for example, do not require trust in third parties. Smart contracts are open source and auditable.
“Separate wallets should be treated like software companies, not regulated like financial services businesses, because they never take over user funds. Similarly, creating decentralized protocols or hosting a website on IPFS [inter-planetary file system] it should be equivalent to releasing open source code, which is protected by free speech in the US. People can send money through a web browser or through internet protocols, but we don’t regulate that as a financial services company, and the same concept applies here.”
Armstrong says he’s “optimistic” that progress could be made on all these fronts next year, despite the public concerns the crypto sector faced in late 2022.
“With regulatory clarity for centralized actors, a level playing field, and preserved decentralized crypto innovation, crypto can bring enormous benefits to the world. There are currently too many distractions from bad actors causing harm and we all need to take responsibility for improving that. I am optimistic that we can make significant progress on the above in 2023 and get crypto legislation passed.”
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