On December 19, 2022, Coinbase CEO Brian Armstrong released a concise blueprint on how to restore trust post the FTX collapse and regulate centralized entities while still protecting decentralized innovations within the crypto ecosystem.
He said: “These are fairly simple steps, but 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.”
Also, via a tweet yesterday, he invited whoever resides in Washington DC over to discuss how to achieve this long-term goal…
In detail, Armstrong invited anyone with access to the Dirksen Senate Office in DC to meet him at the building’s snack bar and “chat about crypto.”
I’m in Washington D.C. and had a meeting canceled. Will be at the Dirksen Senate Office building snack bar for the next hour or so, if anyone wants to come chat about crypto and how we get crypto legislation + regulatory clarity this year.
— Brian Armstrong (@brian_armstrong) February 13, 2023
Let’s get into his call for crypto regulation!
What Caused Coinbase CEO To Speak Out?
The main reason is that “US Is Stifling Crypto Staking and Innovation”. Let me explain.
Coinbase CEO unleashed a series of tweets after rumors circulated that the U.S. Securities and Exchange Commission wants to get rid of crypto staking for retail customers. He also noted there is rising uncertainty in the sector following these enforcement actions…
Armstrong wrote, “I believe it would be a terrible path for the U.S. if that were allowed to happen.” Moreover, the thread highlighted the importance of staking and how it “brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints”…
1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.
— Brian Armstrong (@brian_armstrong) February 8, 2023
And his presence in Washington was mostly due to the SEC announcing a $30-million settlement with rival exchange Kraken on February 9, in which the rumors were confirmed. They agreed to shut down their staking program for all U.S. users. Why? Kraken failed to register the offer and sale of their “crypto asset staking-as-a-service program.”
After the settlement between rival exchange Kraken and the SEC, Coinbase CEO Armstrong arduously defended his company’s staking services.
He argued that Coinbase’s staking services are “fundamentally different” from Kraken’s and are not securities. He even went so far as to say that he is willing to defend this position in court if necessary.
Unfortunately, despite his solid assurance, his company’s shares fell by more than 20% in the wake of the recent events.
Focusing On What’s Important
Armstrong calls for regulatory clarity for centralized actors; these include stablecoins, exchanges, custodians, commodities, and securities. Moreover, he stresses the need to establish and enforce a level playing field. As a result, this will make room for innovation in the decentralized cryptocurrency sector.
Finally, the CEO of Coinbase defends the need to foster new technologies in the U.S. He cites the importance for the country to have clear rules for financial services and Web3 industries for national security reasons.
Stressing that “Regulation by enforcement doesn’t work. It encourages companies to operate offshore, which is what happened with FTX.”
And who would want that scenario to happen again?