Coinbase CEO Backs DeFi, Calls for Legal Precedent

Coinbase CEO Brian Armstrong has expressed his endorsement of decentralized finance (DeFi) protocols. In a recent social media post, Armstrong urged the DeFi protocols to consider legal proceedings in court to establish a precedent, citing the legal system’s consistent commitment to upholding the rule of law.

He stated that the current approach primarily pushes a vital industry toward foreign jurisdictions. According to his post on X (previously Twitter), the United States Commodities and Futures Trading Commission (CFTC) should avoid taking enforcement actions against DeFi protocols because they do not operate as conventional financial service businesses and it is questionable whether the Commodity Exchange Act applies to them.

In the previous week, the U.S. Commodity Futures Trading Commission (CFTC) took action against three DeFi firms for allegedly engaging in unauthorized trading of cryptocurrency derivatives.

According to the regulator, these platforms facilitated the illegal trading of cryptocurrency derivatives without the required registration. In addition to Brian Armstrong, several legislators have expressed support for DeFi protocols.

Summer Mersinger, a Republican commissioner, emphasized the significance of the CFTC focusing on establishing transparent regulations for DeFi rather than quickly resorting to enforcement measures.

She expressed concern that the commission appears to be tending toward enforcement actions, whereas she believes that engaging with the public and establishing clear guidelines should be the top priorities.

The United States Commodity Futures Trading Commission (CFTC) recently won a case against Ooki DAO for operating an illegal trading platform and violating other regulatory guidelines.

A federal magistrate ruled similarly in favor of the CFTC in June 2023, resulting in the closure of Ooki DAO and the imposition of a fine of over $600,000.

In recent months, U.S. regulatory authorities have increased their scrutiny of cryptocurrency companies.

Notably, regulatory bodies such as the United States Securities and Exchange Commission (SEC) have initiated investigations into significant players such as Coinbase and Binance.