FTX releases crypto regulation recommendations prior to US congressional hearing
FTX, the Bahamian-based crypto exchange, has released a list of principles and proposals for helping policymakers build the regulatory framework around the crypto sector.
The policy has identified various legal requirements, including recommending the market-structure options that have been made by several leading crypto exchanges, in addition to suggestions of implementation across all jurisdictions.
FTX has shared the proposals through a blog post titled “FTX’s Key Principles for Market Regulation”. The move came after Maxine Waters, the Chair of the House Committee on Financial Services, had invited several CEOs of major crypto companies to testify on the topic of digital assets and provide their inputs on the future of finance.
Out of the ten key principles outlined in the document, one of the suggestions has called for an alternative regulatory approach that recommends a unified regulatory regime for all spot and derivatives marketplaces.
According to the proposals as explaiend in the blog post, the regulatory label on any given product or market does not need not to change the core goals of regulation. At the same time, the same rulesets should also “apply across all markets.”
FTX has also explained the need for a direct membership market structure, i.e., all entities would be allowed to perform regulated trades without involving a third party.
The exchange has also suggested a regulation that demands greater transparency around the custodians of crypto assets. It has also made an argument that the platform “users should be given visibility” into the manner custodial services have planned addressing concerns related to fraud and theft.
The blog has further demanded frameworks for reporting transactional activity to avoid any kind of market manipulation activities as well as ensure customer protection.
Simultaneously, FTX has pointed out the need for regulating stablecoin issuance, stating that any platform operator that has permitted the use of stable coins for settlement of transactions should be ideally required “to explain the standards the platform operator has used for deciding which stable coins it has permitted for such purposes.”
In August, CEO of FTX, Sam Bankman-Fried had announced the exchange’s proactive measures in streamlining its Know Your Customer (KYC) operations.
Citing the great importance of KYC tools for the mainstream adoption of cryptocurrencies, Bankman-Fried had inaugurated a new feature on FTX that would confirm a user’s jurisdiction based on their registered contact number.
Bankman-Fried had said that the firm would check users’ phone numbers against their submitted names in KYC1, as a process of further verifying them. When that doesn’t work, or there isn’t sufficient data, they would then require “KYC2 to access some features of the site, including futures.”