Brian Armstrong, CEO of Coinbase, hopes DeFi protocols will be the ones to fight crypto regulation by taking cases to court and setting precedents.
Coinbase: CEO motivates DeFi projects to create new cases for crypto regulation
Brian Armstrong, CEO of Coinbase, shared on X one of his “hopes,” stirring DeFi protocols to action to create healthy crypto regulation.
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
Basically, Armstrong wants to encourage Decentralized Finance projects to fight regulators directly in court, thus creating precedent-setting cases.
In fact, the Coinbase CEO points out that the Commodity Futures Trading Commission (CFTC) should not create enforcement actions against DeFi protocols, since they are not financial services firms.
In order to clarify this concept of crypto regulation in the US, Armstrong relies on the DeFi projects. The alternative for the US, would be to see such an important industry go overseas.
Coinbase CEO and his challenge to DeFi protocols regarding crypto regulation in the US
The challenge raised by Armstrong is a response to what happened last week when the CFTC cracked down on Decentralized Finance protocols.
Specifically, the CFTC took action against the operators of three DeFi platforms for “offering illegal derivatives trading on digital assets.” This is the first time ever that the derivatives regulator has charged the operators of DeFi.
Among the responses to Armstrong’s tweet was Zengo Wallet CEO Ouriel Ohayon, who wrote as follows:
“Brian I agree if Defi was truly De-fi, but when the code has admin keys controlled by one or a few, backdoors, ability to restart/stop the protocol and more it is more DeCeFi, whether it is the protocol or the protocol interface.”
Other comments, too, joined in on the question of whether DeFi projects are truly decentralized.
Chris Blec, a Defi analyst, tweeted as follows:
“These ‘defi’ developers have backdoors to drain all funds and make any changes to the code they want. How can it be decentralized?”
And yet another comment:
The integration of Bitcoin’s Lightning Network
Recently, the CEO of Coinbase, Armstrong confirmed the integration of Bitcoin’s Lightning Network into his crypto-exchange, following several consultation processes.
Along with that confirmation, Armstrong wanted to solidify his position regarding Bitcoin as the most important cryptocurrency asset. The news also involved investment rockstar Cathie Wood, who said that this LN implementation of Bitcoin in Coinbase, will pave the way for faster and cheaper transactions to its 100 million users.