- Regulators should start by “putting one foot in front of the other” when considering guidelines in the space, says Bankman-Fried
- Preserving inclusivity while protecting against bad actors is crucial to the segment, according to the FTX founder.
Cryptocurrency regulators should focus on stablecoins, FTX founder Sam-Bankman Fried said, adding that agencies should first look to address “low-hanging fruit” within the segment to reduce risks.
Speaking in Washington, DC on Wednesday at an event hosted by the Bipartisan Policy Center, Bankman-Fried said that the crypto space has grown to the point that regulatory oversight is necessary and healthy.
The “cleanest example,” he noted, of the necessary regulation is to ensure that there is the largest number of dollars backing the number of stablecoins in circulation.
“Right now, regulatory oversight of [stablecoins] it is not very clear, it is extremely messy and there are many cooks hanging around the kitchen, but there is no head chef,” said the crypto executive. “Basically, there is no central regulator that clearly has a duty to ensure that, and there should be.”
the shock of TerraUSD (UST) algorithmic stablecoin earlier this year, in part, cryptocurrency prices plummeted, triggering a wave of insolvencies in the space.
the President’s Task Force on Financial Markets recommended steps for Congress and regulators to make stablecoins more secure last year. A recent report released by the Financial Stability Oversight Council (FSOC) claims that passing legislation to regulate stablecoins is one of the 10 steps to decrease the risk that crypto assets supposedly represent.
A cryptographic framework published by the White House last month he added that the US would continue to investigate whether to launch a central bank digital currency (CBDC), a digital form of the dollar that Federal Reserve Chairman Jerome Powell said earlier this year. could co-exist with privately issued stablecoins.
“The development of CBDC is a red herring,” Georgia Quinn, general counsel at Anchorage Digital, told Blockworks.
“What the industry really needs instead is clear and consistent regulation of stablecoins to bolster and update the US dollar for the digital age,” he said.
Instead of striving for perfection right now in a space that’s hard to predict, regulators should start by “putting one foot in front of the other” when considering regulation in the space, Bankman-Fried said Wednesday.
“When you start to get into DeFi, there are a lot of very interesting policy questions that I don’t think there is a consensus on… and we’ll have to get to that eventually,” he added. “But let’s not be too critical of that at first.”
Blockchain is not a fait accompli
Bankman-Fried dedicated a portion of the discussion to sharing the big picture of cryptocurrencies, noting that one of the biggest advantages is having a real-time transaction settlement system without relying on intermediaries that could add risk.
The founder of the Bipartisan Policy Center, Jason Grumet, who moderated the talk, countered the advantages of the “nefarious uses” of cryptocurrencies, alluding to recent hacks in space. Bankman-Fried acknowledged the complicated narrative of transparency vs. privacy when addressing illicit financing cases.
“I am optimistic about blockchain for [access and inclusion]; I don’t think it’s a fait accompli,” she said. “I think we could still screw it up and end all the foreclosure that we find in traditional finance if we’re not careful.”
While the blacklisting of addresses associated with blockchain-related financial crimes is important, Bankman-Fried added, requiring a whitelisting system in which people can only access digital finance if they are approved would be moving away from the fundamental principles of technology.
“Start with the presumption of freedom and then restrict in case of bad activity, I think it’s super healthy,” he said. “Start with the assumption that you can only do something if you get an explicit go-ahead, and all marginalized groups will be marginalized once again.”
Get the top crypto news and information of the day delivered to your inbox every night. Subscribe to the free Blockworks newsletter now.