In Brief:
- FTX released a set of 10 principles to assist policymakers in developing the crypto regulatory framework.
- The document proposed that exchanges should be able to choose a single primary regulator.
- FTX wants regulators to maintain track of all registered stablecoins.
FTX, the leading cryptocurrency exchange, released a document with a set of principles and proposals to assist policymakers in developing a crypto regulatory framework.
The FTX Key Principles for Market Regulation of Crypto-Trading Platforms are a collection of ten principles that outline a regulatory environment.
The principles, if implemented, will enable regulators to successfully regulate the digital asset ecosystem while maximizing potential growth and innovation.
The document was made public just days before FTX CEO Sam Bankman-Fried was scheduled to appear at the House Financial Services Committee hearing titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States,” along with executives from Paxos, Stellar, Coinbase, and Circle.
FTX proposed that exchanges be able to choose a single primary regulator. This strategy would surely be beneficial to FTX, which runs both a spot and a derivatives exchange.
One section, in particular, focuses on stablecoin regulation. The exchange wants regulators to maintain track of all registered stablecoins and have them audited by an accounting firm on a regular basis.
As stated in the document, “A platform operator that permits the use of stable coins for settlement of transactions should be required to explain the standards the platform operator uses in deciding which stable coins it permits for such purposes.”
The exchange also proposes a regulation requiring greater openness from crypto-asset custodians, claiming that customers should be provided visibility into how custodial services plan to manage fraud and theft concerns.
The requirement for a direct membership market structure, which allows firms to conduct regulated trades without the involvement of a third party, is also addressed by FTX.
So overall the FTX principles cover themes including asset custody, consumer protection, risk assessment, KYC/AML, and other common financial regulatory compliance issues.
The U.S. authorities are heavily involved in trying to assess the credibility of existing guidance and regulations for crypto and various other digital assets. A few days back, the SEC’s Investor Advisory Committee invited a crypto panel for a meeting under the title of “Helping to Ensure Investor Protection and Market Integrity in the Face of New Technologies.” The meeting focused on the regulatory framework and regulations surrounding digital assets, market structure challenges, and identifying risk in rapidly evolving technology.
