Coinbase CEO Urges DeFi Firms to Sue Regulators for Precedent

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DailyCoin2023/11/09 23:42

By:DailyCoin

Coinbase CEO is persistent in his advocacy for fair crypto regulation.
The CEO cast doubt on whether CEA applies to DeFi.
Armstrong hopes DeFi protocols will start litigating their CFTC cases in court.

Coinbase CEO Brian Armstrong has called out the Commodity Futures Trading Commission (CFTC), scolding the regulator for “creating” enforcement actions against decentralized finance (DeFi) protocols.

Armstrong’s remarks follow CFTC’s recent regulatory crackdown on three prominent DeFi entities in the U.S., Opyn, ZeroEx, and Deridex, all charged with offering illegal leveraged and margined retail commodity transactions in digital assets.

DeFi Protocols Shouldn’t Settle

In a Twitter (X) post addressed to his over one million followers, Armstrong noted that the CFTC should cease targeting DeFi protocols, as these firms don’t function as conventional financial service businesses.

Notably, the CEO affirmed that it’s questionable whether the Commodity Exchange Act (CEA) even applies to DeFi protocols, noting that enforcing the provision would only “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 CFTC should not be creating enforcement actions against decentralized (DeFi) protocols. These are not financial service businesses, and it’s highly unlikely the Commodity Exchange Act even applies to them.

My hope is these DeFi protocols take these cases to court to…
— Brian Armstrong 🛡️ (@brian_armstrong) September 13, 2023

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 Overreaching?

Armstrong is not the first to take a jab at the derivatives market watchdog over its recent enforcement conduct.

On September 7, Commissioner Summer K. Mersinger issued a dissenting statement on CFTC’s regulatory action against Opyn, ZeroEx, and Deridex.

The commissioner said that finding liabilities and imposing action on a novel technology decentralized in conception and operation (DeFi) was not previously the subject of a CFTC enforcement action.

“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.

Read why Armstrong believes crypto will be a major policy matter ahead of the 2024 U.S. Election:
Coinbase CEO: Crypto to Take Center Stage in 2024 US Election

Read this article to find out what the Coinbase CEO thinks about Bitcoin Lightning:
Brian Armstrong on Bitcoin Lightning: Is Coinbase Late to the Game?

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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