FTX CEO Sam Bankman-Fried (SBF) mentioned whereas the crypto business 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 doable requirements to assist the crypto business 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 verify in opposition to illicit financing, SBF proposed that the business 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 simply opened to a choose few.
SBF argued {that a} blocklist mannequin is more practical because it permits for transactions to movement seamlessly whereas prohibiting unlawful transfers when detected.
If a consumer’s deal with is unlawfully sanctioned, SBF means that the OFAC ought to present an choice to treatment the deal with.
To treatment an deal with, the consumer merely transfers the sanctioned belongings to a certified deal with for presumably 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 might be extra environment friendly with a 5-5 commonplace.
On this new commonplace, the primary level of name for hacks might be to make the shoppers complete.
Secondly, the hacker ought to decide to returning 95% of the stolen funds. The withheld 5% might be thought-about a beneficiant bounty which can encourage extra white hat hackers to be incentivized to guard the business.
On defending prospects, SBF means that retail buyers must 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 cross the take a look at 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 buyers and internet hosting web sites for DeFi protocols might have some degree of licensing and KYC obligations.
SBF added:
“When you host a web site that makes it simple for US retail to connect with and commerce on a DEX, you’ll probably need to register as one thing like a broker-dealer.”
SBF admitted that DeFi protocols opting to acquire an working license is a compromise which may be wanted for crypto innovation to proceed.
