Armstrong claims the DeFi sector must push regulators for clear regulatory guidelines.
Crypto exchange Coinbase CEO Brian Armstrong recently voiced his strong support for decentralized finance (DeFi) and recommended the sector actively seek judicial rulings to clarify the current regulatory environment.
Armstrong's comments come amid a wave of enforcement actions against DeFi companies by the United States Commodities and Futures Trading Commission (CFTC).
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In a message posted on social media platform X (formerly Twitter), Armstrong asserted that the CFTC's attempts to regulate DeFi companies like traditional financial firms are misguided.
According to him, it remains uncertain whether the existing Commodity Exchange Act is relevant to the unique nature of DeFi protocols. His statement highlighted the concern that stringent regulations force the industry to seek friendlier jurisdictions abroad.
Armstrong's remarks were timed closely with the CFTC's recent actions against three DeFi platforms. The regulatory body accuses the platforms of allowing unauthorized trading in cryptocurrency derivatives, all without the required registrations.
However, Armstrong is not alone in his position. Republican Commissioner Summer Mersinger also advocated for a more consultative approach from the CFTC. She claimed the commission should focus on setting clear regulatory guidelines for DeFi rather than prioritizing enforcement actions.
This discussion is especially pertinent considering a recent legal victory by the CFTC over Ooki DAO, which was found to be operating an unauthorized trading platform. A federal court ruled in favor of the CFTC in June 2023, leading to the shutdown of Ooki DAO and imposing a fine of over $600,000.
These developments happen against a broader backdrop of increased scrutiny of cryptocurrency companies, including Coinbase itself, by various US regulatory bodies like the Securities and Exchange Commission (SEC).
Coinbase CEO Brian Armstrong's public endorsement of the DeFi sector serves as a call to action for judicial clarity in a fast-evolving but uncertain regulatory landscape. His comments, along with similar concerns raised by other officials, underscore the need for transparent guidelines that could provide the DeFi industry with the stability it needs for further growth.
