Coinbase CEO Brian Armstrong has emerged as a vocal advocate for the decentralized finance (DeFi) sector, urging a different approach when it comes to regulatory actions. In a recent social media update, Armstrong made a compelling case for DeFi projects to turn to the courts in order to establish a legal precedent. He emphasized that the traditional legal system has consistently demonstrated its commitment to upholding the principles of justice. Currently, the prevailing enforcement strategy is steering a critical industry toward offshore jurisdictions, he warned.
Expressing his viewpoint on X (formerly Twitter), Armstrong urged the United States Commodities and Futures Trading Commission (CFTC) to exercise caution when it comes to taking enforcement measures against DeFi protocols. He pointed out that these protocols operate in a fundamentally different manner compared to traditional financial service businesses. Moreover, there is a legitimate question regarding the applicability of the Commodity Exchange Act to these innovative entities.
This call for prudence comes on the heels of the CFTC’s recent actions against three DeFi companies. These firms faced allegations of engaging in unauthorized trading of cryptocurrency derivatives. The regulator contended that these platforms facilitated illicit crypto derivative trading without obtaining the necessary registrations.
In addition to Brian Armstrong, several lawmakers have thrown their support behind DeFi protocols. CFTC Commissioner Summer Mersinger highlighted the significance of the CFTC’s role in crafting transparent regulations for the DeFi space. She stressed the importance of avoiding hasty enforcement actions and instead urged the commission to engage with the public and establish clear guidelines as their primary focus. Mersinger expressed concerns that the current approach seems to lean towards punitive measures rather than constructive dialogue and regulatory framework development.