Coinbase CEO vs. US Regulators
On Thursday, Coinbase CEO Brian Armstrong took to X (formerly X) to urge developers of decentralized finance (DeFi) projects to go to court to push the Commodity Futures Trading Commission (CFTC) to formulate laws tailored to govern the space.
Armstrong asked the regulator to stop leveling enforcement actions against DeFi protocols based on the Commodity Exchange Act, claiming that it does not apply to the sector. He is optimistic that DeFi players will emerge victors against the commission when they move to court.
CFTC Enforcement Actions
Since January this year, United States regulators, including the CFTC, have brought several enforcement actions against crypto players. On Thursday last week, the commission filed charges against DEXes (decentralized exchanges) ZeroEx, Deridex, and Opyn. The three DeFi protocols were accused of offering “margined and leveraged commodity transactions in crypto” without a license.
Moreover, the CFTC issued cease-and-desist orders to the DEXes and demanded them pay penalty fees. Opyn was directed to pay $250,000, while Deridex and ZeroEx paid $100,000 and $200,000, respectively.
The enforcement action was disapproved by CFTC Commissioner Summer Mersinger, who argued that the move did not align with the agency’s duty to promote technological innovations. She then asked the commission to come up with clear rules for regulating the DeFi space.
SEC vs. DeFi
The CFTC isn’t the only United States regulator targeting the DeFi players. Earlier this year, the US Securities and Exchange Commission (SEC) attempted to bring the decentralized finance sector under its jurisdiction by proposing a new definition of the term “exchange.”
At the time, the SEC argued that its current rules for centralized trading platforms that list crypto securities could also be applied to decentralized exchanges. However, some commissioners of the agency rejected the move.
Meanwhile, DeFi players secured court victory at the start of this month. A ruling delivered by Judge Katherine Faila on September 1 cleared decentralized exchange Uniswap of accusations related to scam crypto assets. The Judge said that DEXes should not be held accountable for the wrongdoings of issuers of scam tokens, arguing that their decentralized nature protects them against legal predicaments.
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