Coinbase CEO champions DeFi, calls for court action to set legal precedent

Friday, 15 Sep 2023

Cointelegraph By Amaka Nwaokocha

Original Article

Coinbase CEO Brian Armstrong cautioned the United States Commodities and Futures Trading Commission to avoid taking enforcement actions against DeFi protocols.


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Coinbase CEO Brian Armstrong has expressed his endorsement of decentralized finance (DeFi) protocols. In a recent social media post, Armstrong urged DeFi protocols to consider legal proceedings in court to set a precedent, as the legal system has consistently demonstrated its dedication to upholding the rule of law. The current approach is mainly pushing a crucial industry toward overseas jurisdictions, he said.

According to his post on X (formerly Twitter), the United States Commodities and Futures Trading Commission should avoid taking enforcement actions against DeFi protocols, as they do not function as conventional financial service businesses, and it’s questionable whether the Commodity Exchange Act is even applicable to them.

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

In the previous week, the U.S. CFTC took action against three DeFi companies for engaging in alleged unauthorized trading of cryptocurrency derivatives. According to the regulator, these platforms enabled the illicit trading of crypto derivatives without the necessary registration.

In addition to Armstrong, certain legislators have also shown their support for DeFi protocols. CFTC Commissioner Summer Mersinger underscored the importance of the CFTC concentrating on establishing transparent regulations for DeFi rather than swiftly resorting to enforcement measures. She voiced her apprehension that the commission appears to be leaning toward enforcement actions, whereas she believes that engaging with the public and setting clear guidelines should be the primary focus.

Related: CFTC commissioner plans to modernize investor protection with technology

The U.S. CFTC recently achieved a legal triumph in a case against Ooki DAO for operating an illicit trading platform and contravening other regulatory guidelines. In June 2023, a federal judge similarly ruled in favor of the CFTC, resulting in the closure of Ooki DAO and the imposition of a fine exceeding $600,000.

In recent months, cryptocurrency companies have encountered increased scrutiny from U.S. regulatory authorities. Notably, regulatory bodies such as the U.S. Securities and Exchange Commission have initiated investigations into major players, such as Coinbase and Binance.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?


Cointelegraph By Amaka Nwaokocha

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