FTX releases crypto regulation proposals before US congressional hearing
Bahamian-based cryptocurrency exchange FTX released a list of principles and proposals to help policymakers build the regulatory framework. The policy recommends the market-structure choices made by several leading crypto exchanges and suggests its implementation across all jurisdictions.
FTX shared the “FTX’s Key Principles for Market Regulation” blog after Maxine Waters, the chair of the House Committee on Financial Services, invited several CEOs of major crypto firms to testify on the topic of digital assets and the future of finance.
Out of the 10 key principles, one of the recommendations calls for an alternative regulatory approach that proposes a unified regulatory regime for spot and derivatives marketplaces. According to the blog:
“The regulatory label on a given product or market need not change the core goals of regulation, and the same rulesets should generally apply across all markets.”
FTX also explains the need for a direct membership market structure, i.e, allowing entities to perform regulated trades without the involvement of a third party. The exchange also suggests a regulation demanding greater transparency around the custodians of crypto assets, arguing that the platform “users should be given visibility” into how custodial services plan to address concerns related to fraud and theft.
The blog further demands frameworks for reporting transactional activity to avoid market manipulation and ensure customer protection. FTX also pointed out the need for regulating stablecoin issuance:
“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.”
In August, FTX CEO Sam Bankman-Fried announced the exchange’s proactive measures to streamline its Know Your Customer (KYC) operations.
Citing the importance of KYC tools for cryptocurrency’s mainstream adoption, Bankman-Fried inaugurated a new feature on FTX that confirms a user’s jurisdiction based on their registered phone number:
“We check users’ phone numbers against their submitted names in KYC1, in order to further verify them. When this doesn’t work or there isn’t data, we’ll require KYC2 to access some features of the site, including futures.”