All agree that the collapse of FTX and other companies requires better regulation of crypto. But how to ensure such regulation? Coinbase CEO Brian Armstrong gives us some ideas for clearer crypto regulation on the Coinbase blog.
Centralized actors pose the most risk
Centralized players, i.e. issuers of stablecoins, exchanges and custodians pose the greatest risk of harm to consumers. It is therefore around these players that regulatory clarity must first be created, according to Brian Armstrong. He thus listed a number of proposals. Indeed, he proposed a regulation of stablecoins by standard laws, registration as a state trust, the establishment of reasonable controls or even the respect of basic standards in terms of cybersecurity.
Regulations must be fair
On the coinbase blog, Brian Armstrong also proposes the application of fair playing rules. This implies that when a country passes laws, these must apply to all crypto companies in the territory, but also, companies abroad serving its citizens. Indeed, one of the main obstacles is that regulators and law enforcement agencies do not have an international mandate to investigate companies abroad. Armstrong did not fail to cite the example of FTX.com which was based in the Bahamas.
Innovating in decentralized crypto
Finally, Armstrong believes that the decentralized aspects of crypto present an opportunity to create stronger protections for consumers. This is the case of self-managed wallets. These tools allow customers to store their own crypto without the intermediary of anyone. The default open source and public smart contracts that power DeFi and Web3 applications allow anyone to check the code to see if it really does what it claims to do.
He also argues that it is necessary to be able to see, in a transparent way, the solvency and the financial statements of organizations built entirely on-chain.
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