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The CEO of Coinbase, Brian Armstrong, is advocating for the tightening of regulations on centralised cryptocurrency platforms. However, he adds to this that he believes that decentralised platforms should be allowed to work without the same regulatory pressure.
In a blogpost on Coinbase, Armstrong drew up a blueprint for how he sees regulation working in the industry to reestablish trust after the crash of FTX. In this post, he notes that “clarity in regulation” is a big step in making sure all actors, from government and authority figures to exchanges and users, are on the same page.
“[It] will require us all to move forward together, as companies, policymakers, regulators, and customers. We should pursue early, relatively easy, wins passing new legislation, instead of waiting to get something comprehensive and perfect.”
The steps required to achieve this, according to Armstrong, include creating clear regulation for centralised platforms – including legislation around stablecoins, exchanges and custodians, and commodities and securities – as well as establishing and enforcing a level playing field so that malicious entities aren’t given room to act.
2/ IMO, legislation should start with centralized actors (stablecoin issuers, exchanges, and custodians) because this is where we’ve seen the most risk of consumer harm, and pretty much everyone can agree it should be done. It’s the low hanging fruit.
— Brian Armstrong (@brian_armstrong) December 20, 2022
Importantly, Armstrong believes that decentralised platforms and protocols should be given room to innovate without governance of central authorities. In his note, he suggests that the technology behind decentralised protocols, such as smart contracts, mean that customers and users are in a position where trust is not necessary. Using self-custody wallets, for example, allows users to store their own cryptocurrency while relying on the technology rather than a platform for security and safe-keeping:
“First, self-custodial wallets allow customers to store their own crypto in a way where they don’t have to trust anyone else. Technology improvements, like multi-party computation and social recovery, will make it easy for anyone to safely store their own crypto without needing to trust third parties.”
8/ To get there we need to preserve the innovation potential of this technology. Regulation should focus on intermediaries (the centralized actors in cryptocurrency), where additional transparency and disclosure is needed.
— Brian Armstrong (@brian_armstrong) December 20, 2022