By Richard Hines
In light of the damages caused by the collapse of the famous FTX crypto exchange, Coinbase’s chief executive officer, Brian Armstrong, has released a detailed plan.
He explained how to regain the lost trust in the crypto industry and how all stakeholders have to work together in making new comprehensive legislation and generally scaling the crypto industry.
Centralized Actors In The Market Need New Regulations – Armstrong
Brian Armstrong noted in his released blueprint that the world has mostly lost trust in the concept of crypto generally; however, to change the status quo, there are some steps that the key players in the industry, ranging from regulators to even customers, will have to take.
First on Armstrong’s list is the need for the centralised bodies in the crypto industry to be adequately regulated.
On Stablecoin, he stated that although there are already steps being taken to regulate stablecoin issuers that hopefully will materialise by 2023, it is however important to note that issuers do not necessarily have to be banks unless such banks want to engage in fractional reserve lending.
The CEO went on to state the standard requirements to be met as an issuer, which include being properly registered as either an OCC national trust charter or as a state trust, undergoing thorough and adequate annual audits, and being standard at least in terms of basic cyber security standards, among others.
As regards exchanges and custodians, Armstrong stated that they should direct their focus on ensuring know-your-customer (KYC) and anti-money laundering (AML) strategies.
In addition to that, he also stated that there should be a concept of a single licencing procedure where they will only need a licence to establish in a country.
In addition to that, he also emphasised the need to adequately make laws that would protect the interests of consumers, prevent the manipulation of markets, and strongly protect customers’ assets.
As regards crypto asset classification, Armstrong explained how it is the duty of regulators like the SEC and CFTC to gauge whether a virtual asset is a security or commodity. In light of this, he proposed what he referred to as “a modern-day Howey Test for cryptocurrency.”
Regulations Should Apply Equally Accross All Markets
Brian Armstrong went on further to emphasise the need for both local and foreign crypto entities to be held to the same regulations. Using the FTX as an example, he stated that until foreign companies in these countries are held to the same regulations as local ones, things will not be the same.
He goes on to state that until then, companies will continue to flee to foreign spaces where they will be given adequate leeway to perform their “atrocities” to the detriment of their users and at the disadvantage of local companies.
Concludingly, Armstrong emphasised the need for innovations in the decentralised crypto space while stating that it should not be regulated. He also emphasised the need not to let political bias affect sensitive issues like regulatory clarity for crypto.