- CEO Brian Armstrong laid out plans to regulate centralized actions while preserving decentralized innovation.
- The CEO recommended a modern-day Howey Test for the categorization of cryptos.
- Armstrong added that centralized entities like stablecoin issuers, exchanges, and custodians do most consumer harm.
Early today, Coinbase CEO Brian Armstrong suggested regulation ideas for the crypto industry in his latest blog. He outlined his plans to bring in the regulation of centralized actions and also facilitate more decentralized innovation.
Armstrong pointed out that centralized entities like stablecoin issuers, exchanges, and custodians do most consumer harm and this fact is already agreed upon, by many crypto users.
The CEO also recommended a modern-day Howey Test for the categorization of cryptocurrency tokens. He added that regulators must publish their classification of the top 100 crypto assets by market cap. Regulators must also clarify if these assets are a commodity, security, or other.
Armstrong explained how in the absence of regulations, Coinbase created its own ‘detailed legal analysis’ for every listed asset.
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.
He added that stablecoins can be effectively regulated under current financial services laws like state or national trust charters.
Armstrong suggested that countries regulating crypto businesses must enforce laws domestically while also making sure that companies serving citizens abroad must also abide by these laws. Armstrong pointed out how FTX was based out of the Bahamas but also served clients in many countries, including the US.
The CEO added that if the same laws are not enforced both domestically and abroad, then crypto companies serving clients from favorable jurisdictions overseas will be benefited but other companies trying to follow the rules on land would be penalized.