- FTX has released a regulatory framework ahead of the congressional hearing next week
- FTX is committed to ensuring that consumers are safe and can access the market, the exchange said
Just five days before its CEO is scheduled to testify before Congress on the state of the digital asset industry, cryptocurrency exchange FTX has thrown its hat into the ring with the release of a regulatory framework.
FTX joins other exchanges, including Coinbase, Ripple and Binance in creating a set of guidelines around digital assets designed to help officials navigate cryptocurrency regulation.
FTX released its “key principles for market regulation of crypto,” of which there are 10, via a blog post on Friday.
The list is designed to “guide policy makers and regulators as they build the regulatory framework for spot and derivatives crypto markets,” the post read.
The exchange argues for the creation of one central regulatory body, although not necessarily a new organization, with one set of rules for spot derivatives trading. The issue of jurisdiction over the digital asset industry has been at the top of mind for both regulators and industry leaders as officials struggle to determine how cryptocurrencies fit into the current system.
“We expect that regulators likely will play an important role during that period and use the authorities they have to address the questions of how best to supervise the industry and its products,” Mark Wetjen, FTX US head of policy and regulatory strategy, told Blockworks. “Congress likely will continue in a fact-finding mode for much of this period but part of that process will be engagement with the regulators as well as the industry.”
There have been questions about how digital assets should be classified, as securities or commodities or something entirely new. The US Securities and Exchange Commission (SEC), which alongside the Commodities Futures Trading Commission (CFTC) has taken on much of the burden of cryptocurrency regulation, has acknowledged that it is lacking in resources and time to properly consider the industry.
SEC Commissioner Hester Peirce admits that there is a jurisdictional battle over crypto, but she is unsure if creating a new body is the right answer.
“We have such a fragmented regulatory system for financial products and services generally that I don’t know that adding another regulator would be my top preference,” she said during the virtual Bloomberg Financial Innovation Summit in November.
Additionally, FTX argues that regulators need to ensure that stablecoins used on platforms like FTX meet “appropriate standards.”
“Stable coins are exposed to reserve-volatility as well as redemption risk, and platform users should be entitled to some understanding of whether and to what extent those risks could impact their activity on the platform, including their impact on settlement of transactions,” the post read.
The report is released just ahead of the House Financial Services Committee hearing titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States,” where FTX head Sam Bankman-Fried is scheduled to appear. Bankman-Fried will be joined by executives from Paxos, Stellar, Coinbase and Circle on Dec. 8.
FTX shares similar views to many of their competitors in the crypto space, Wetjen said.
“FTX believes that while there is novelty posed by the technology when it comes to properly supervising the industry to protect investors, it makes sense to leverage existing policies and approaches that work where possible, and work with policy makers to fill remaining gaps,” he said. “FTX believes that much of the industry likely sees it the same way.”
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