FTX CEO Sam Bankman-Fried (SBF) stated whereas the crypto business wants to stay an open economic system the place peer-to-peer transfers and codes are free, regulatory oversight is essential for sustainable innovation.
SBF revealed his ideas on attainable 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 test towards illicit financing, SBF proposed that the business adopts blocklist and never allowlist fashions.
With blocklists, all people can commerce freely until sanctioned for dangerous conduct, whereas in allowlists, the transaction door is simply opened to a choose few.
SBF argued {that a} blocklist mannequin is simpler because it permits for transactions to circulation 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 remedy the deal with.
To remedy an deal with, the consumer merely transfers the sanctioned belongings to a licensed deal with for probably burning or freezing. Failure to return the illicit funds will topic the consumer to sanction legal guidelines.
On hacks and shopper 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 normal.
On this new normal, 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 business.
On defending clients, SBF means that retail traders must be given clear and complete data on the asset they’re contemplating.
To find out customers’ suitability to make use of an funding product, platforms might go for a test-based mechanism the place solely those that move the take a look at can entry the product.
Licensing for DeFi protocols
SBF stated that whereas protocols don’t want a monetary license to deploy codes or for validators to substantiate blocks, actions like advertising DeFi merchandise to U.S. retail traders and internet hosting web sites for DeFi protocols may have some stage of licensing and KYC obligations.
SBF added:
“If you happen to host a web site that makes it straightforward for US retail to hook up with and commerce on a DEX, you’d doubtless 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.
