FTX CEO Sam Bankman-Fried (SBF) mentioned whereas the crypto trade wants to stay an open financial system the place peer-to-peer transfers and codes are free, regulatory oversight is essential for sustainable innovation.
SBF revealed his ideas on potential requirements to assist the crypto trade thrive whereas ready for extra established frameworks by U.S. regulators.
1) As promised:
My present ideas on crypto regulation.https://t.co/O2nG1VrW1l
— SBF (@SBF_FTX) October 19, 2022
Implementing blocklist and sanctions
To examine towards illicit financing, SBF proposed that the trade adopts blocklist and never allowlist fashions.
With blocklists, all people can commerce freely except sanctioned for unhealthy conduct, whereas in allowlists, the transaction door is barely opened to a choose few.
SBF argued {that a} blocklist mannequin is more practical because it permits for transactions to move seamlessly whereas prohibiting unlawful transfers when detected.
If a consumer’s handle is unlawfully sanctioned, SBF means that the OFAC ought to present an choice to remedy the handle.
To remedy an handle, the consumer merely transfers the sanctioned belongings to a certified handle for probably burning or freezing. Failure to return the illicit funds will topic the consumer to sanction legal guidelines.
On hacks and client safety
Following the excessive incidence of hacks within the crypto area, SBF proposes that negotiations with hackers will likely be extra environment friendly with a 5-5 customary.
On this new customary, the primary level of name for hacks will likely be to make the shoppers entire.
Secondly, the hacker ought to decide to returning 95% of the stolen funds. The withheld 5% will likely be thought-about a beneficiant bounty which can encourage extra white hat hackers to be incentivized to guard the trade.
On defending prospects, SBF means that retail traders needs to be given clear and complete info on the asset they’re contemplating.
To find out customers’ suitability to make use of an funding product, platforms may go for a test-based mechanism the place solely those that move the check can entry the product.
Licensing for DeFi protocols
SBF mentioned that whereas protocols don’t want a monetary license to deploy codes or for validators to verify blocks, actions like advertising and marketing DeFi merchandise to U.S. retail traders and internet hosting web sites for DeFi protocols might have some stage of licensing and KYC obligations.
SBF added:
“When you host a web site that makes it straightforward for US retail to connect with and commerce on a DEX, you’ll seemingly need to register as one thing like a broker-dealer.”
SBF admitted that DeFi protocols opting to acquire an working license is a compromise that could be wanted for crypto innovation to proceed.
