Sam Bankman-Fried (SBF) has drafted a set of suggested regulations for the cryptocurrency industry “pending full federal regulatory regimes,” which were posted on the FTX Policy blog on Oct. 19. The publication covers many of the issues facing regulators and operators, with specific reference to the United States in some places. In particular, SBF outlined a plan to treat assets in the US in terms of their status as securities or commodities. FTX will apply its plan, wrote SBF.
In the US, according to SBF, FTX’s legal team will analyze assets using the Howey test, case law and guidance to determine whether an asset is a security or a commodity. Non-securities assets will be classified as commodities by default. Also:
“If we find that an asset is potentially a security, we will not list it in the United States unless/until there is a process to properly list it.”
In addition, SBF supported the tokenization of shares in the traditional financial market for practical reasons. He also devoted considerable space to the need to protect clients and advocated knowledge-based investor rating, versus the current income/asset-based rating system.
1) As promised:
My current thoughts on crypto regulation.https://t.co/O2nG1VrW1l
— SBF (@SBF_FTX) October 19, 2022
However, excluding assets that the exchange considers to be securities is not a guarantee of peace with the United States Securities and Exchange Commission (SEC), as Coinbase discovered. When that exchange came under scrutiny from regulators for alleged insider trading, the SEC added securities violations to the charges against the defendants. Coinbase Chief Legal Officer Paul Grewal denied that the exchange offered any securities, stating that “Coinbase has a rigorous process for analyzing and reviewing each digital asset before listing it on its platform, a process that the SEC itself has reviewed.”
FTX is currently under investigation in Texas for alleged violation of the securities law.
Although his entire blogpost is a reaction to the lack of regulation in the cryptocurrency industry, SBF remained optimistic about future developments. “I’m optimistic, for example, that the Stabenow-Boozman bill will protect customers as well as economic freedom, and that federal regulators are moving toward thoughtful frameworks,” wrote in the tweet dedicated to the document.
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