Bahamas-based crypto exchange FTX has published a list of principles and proposals to help policymakers build the regulatory framework. The policy recommends the market structure choices made by various leading cryptocurrency exchanges and suggests their application in all jurisdictions.
FTX shared the publication “FTX’s Key Principles for Market Regulation” after Maxine Waters, the chair of the House Financial Services Committee, invited several CEOs from top cryptocurrency companies to testify on the topic of digital assets and the future of finance.
Of the 10 key principles, one of the recommendations calls for an alternative regulatory approach that proposes a unified regulatory regime for the spot and derivatives markets. According to the publication:
“The regulatory label for a given product or market does not have to change the fundamental objectives of regulation, and the same sets of rules should generally apply to all markets.”
FTX also explains the need for a direct affiliate market structure, that is, one that allows entities to carry out regulated operations without the participation of a third party. The exchange also suggests regulation calling for greater transparency around custodians of crypto assets, arguing that the platform “should give users visibility” on how custodial services plan to address concerns related to fraud and theft.
The publication also requires frameworks to report on transaction activity to avoid market manipulation and ensure client protection. FTX also pointed out the need to regulate stablecoin issuance:
“A platform operator that allows the use of stablecoins for transaction settlement should be required to explain the standards that the platform operator uses to decide which stablecoins it allows for such purposes.”
In August, FTX CEO Sam Bankman-Fried announced the exchange’s proactive steps to streamline its Know Your Customer (KYC) operations.
Citing the importance of KYC tools for the adoption of cryptocurrencies, Bankman-Fried launched a new feature in FTX that confirms a user’s jurisdiction based on their registered phone number:
“We check the phone numbers of users with their names submitted in KYC1, to verify them. When this does not work or there is no data, we will require the KYC2 to access some functions of the site, including future ones.”