SBF Wants Regulation
FTX CEO Sam Bankman Fried is lobbying over a bill that would create a new way of the land when it comes to Bitcoin and other digital assets. However, this has caused a stir among DeFi advocates in Washington D.C.
At a recent gathering of crypto advocates, the opposing sides made their views clear. Bankman-Fried’s proposal would see greater regulation and scrutiny placed on digital assets, while the DeFi advocates believe that this would stifle innovation in the space.
It’s unclear where the bill will end up, but it’s clear that there is division in the crypto community over how to move forward.
Many in the DeFi Space are hustling to slow the passage of a regulation bill on digital assets hoping that it can be delayed to next year. In a sort of civil war between crypto’s largest players Washington lawmakers are in the middle. United States Senators Debbie Stabenow, D-Mich, and John Boozman, R-Ark wrote legislation in response to the CFTC’s proposal that would give the agency power to directly oversee and regulate cryptocurrency trading. The new bill is called the “Digital Commodities Consumer Protection Act”.
An unusual coalition has come out in support of the bill. This includes CFTC Chair Rostin Behnam who testified in support of the bill in September as well as FTX CEO Sam Bankman-Fried.
Bankman-Fried’s proposal would see greater regulation and scrutiny placed on digital assets while the DeFI advocates believe that this would stifle innovation in the space. This event has caused a stir among DeFi advocates in Washington D.C. and a clear divide has been established between the two groups.
SBF More Political
The leader of FTX has been even more political, meeting frequently with Washington lawmakers and spending millions into political races this midterm cycle. A donation of $23 million was given by the FTX CEO towards his own Protect Our Future sup PAC which leans heavily towards the democratic party. The super PAC supported Democratic primary candidates as part of its pandemic preparedness. Sam Bankman-Fried has also donated thousands to individual lawmakers as well.
The DCCPA would essentially provide a clear legal structure around large portions of the crypto market. This has caused the crypto industry to push back. The bill applies to what would be called digital commodities and currently, most DeFi tokens do not fit that description.
The initial discussion of regulations was more behind closed doors, but as Twitter and other reporting agencies (ourselves included) spoke more on the conversations and negotiations being held around the ideas, the industry and public became more aware of what was going on.SBF ( Sam’s Twitter namesake) published a manual describing his idea in full.
At the beginning of this month, a meeting was held between Messari CEO Ryan Selkis which included the DeFi Education Fund, The Crypto Council for Innovation, The Blockchain association, Coin Center,and FTX.
“It’s important we get this right, without rushing to pass legislation that could inadvertently hurt emerging protocols and software developers” stated Selkis.
SBF himself was late to the meeting and supported his ideas for legislation. A dividing line was created between those fully advocating for crypto in Washington and those against. SBF stated that the new regulations would be a step in the right direction for crypto while opponents believe the bill he supports only favors exchanges like FTX which would have Bitcoin and Ethereum commodities regulated by the CFTC.
There is not much to the likelihood of the bill being passed in the next few months but the possibility is surely still there according to Alex Grieve Vice President of Tiger Hill Partners which is an advocacy firm that represents clients in the digital assets industry. By itself, the bill may not have time to pass through Congress with the time left for lawmaking this quarter but there is a possibility of it being attached to other legislation pending votes such as a government funding package which be seen during this lame-duck session expected to after the midterm elections.
This is worrying to some DeFi proponents as the regulation “hitching a ride” on another piece of legislation would cause undue stress and strain on a crypto market that is already suffering a very tumultuous bear market.
This can be considered Centralized Crypto leaders getting to the top of the mountain and then throwing down a huge boulder to destroy the way up and take out any others that want to make it to the top. The bill is opposed by many and the hope is that the bill is revisited later as its own piece of legislation and not on the tail of another bill, as the method of tacking on legislation to an already established bill is seen as very underhanded.
Exchanges such as FTX and Binance have become more centralized lately as more regulations and dealings with the government occur. Centralized Crypto exchanges are those that are registered and have gone through the process of being compliant with know-your-customer (KYC) and anti-money laundering (AML) laws.
The industry is at a pivotal moment as many in the US are still very much against anything crypto, while other members want to work with the industry to create a more defined legal structure, much like the one being proposed in the DCCPA.
The group against the bill is made up of some of the largest and most influential crypto organizations such as The Crypto Council for Innovation, The Blockchain Association, Coin Center, and FTX.
These are the organizations that have been fighting for clear and concise crypto regulation and have been making significant progress in doing so. The DCCPA could potentially set them back years if it were to pass in its current form.
The bill is still being worked on and there is a chance that it could be changed to reflect the needs of the industry more accurately, but only time will tell. For now, it is important to stay informed and make your voice heard on the matter.