Criticism of Legislative Initiative
Brian Armstrong, the chief executive of Coinbase, has strongly criticized a recent legislative initiative put forth by Senate Democrats that aims to classify decentralized finance (DeFi) interfaces as brokers. He labeled the proposal a “bad idea” that could significantly impede the United States’ potential to lead in the cryptocurrency sector.
In a post on social media platform X, Armstrong remarked, “We absolutely won’t accept this,” emphasizing his concerns that the regulation could stifle innovation and obstruct the U.S.’s aspiration to become the foremost hub for crypto technology.
Complexity of Legislation
While voicing his objections, Armstrong recognized that the creation of laws is a complex endeavor and expressed Coinbase’s dedication to collaborating with lawmakers to refine the proposal. He stated,
“Legislating is a process, and we’re committed to engaging and helping Congress get it right.”
Details of the Proposed Framework
The controversial framework, as reported by Politico, suggests that any entity or individual reaping profits from available DeFi platform interfaces, such as digital wallets and applications for users, would be obligated to register with either the Securities and Exchange Commission or the Commodity Futures Trading Commission, thus operating as a licensed brokerage.
Industry Reactions
Armstrong’s dissenting view is echoed by others within the crypto sector. Summer Mersinger, CEO of the Blockchain Association and a former commissioner at the CFTC, warned that the outlined regulations could render decentralized finance, as well as wallet and application development, nearly impossible in the U.S. She argued that the proposal’s language is impractical and would compel responsible developers to relocate overseas. Mersinger urged for continuous bipartisan dialogue among policymakers to prevent technological regression.
Similarly, Jake Chervinsky, legal officer at venture firm Variant, expressed his apprehension on social media, suggesting that the regulatory efforts being proposed by the Senate effectively amount to a ban on cryptocurrency activities. He characterized the current political climate regarding crypto market structure as deeply concerning and questioned the likelihood of reaching a favorable agreement soon.
