FTX releases encryption regulation proposal before U.S. Congressional hearing
The Bahamas-based cryptocurrency exchange FTX has published a list of principles and recommendations to help policymakers establish a regulatory framework. This policy recommends market structure choices made by several leading cryptocurrency exchanges and is recommended for implementation in all jurisdictions.
FTX was invited by Maxine Waters, Chairman of the House of Representatives Financial Services Committee, to share the “Key Principles of FTX Market Supervision” blog The chief executives of several major crypto companies testified Topics about the future of digital assets and finance.
10 keys in principle, One of the recommendations called for the adoption of alternative regulatory methods to propose a unified regulatory system for the spot and derivatives markets. According to the blog:
“Regulatory labels on specific products or markets do not need to change the core objectives of regulation. The same set of rules should generally apply to all markets.”
FTX also explained the necessity of a direct membership market structure, which allows entities to conduct regulated transactions without the involvement of third parties. The exchange also recommended the development of a regulation that requires increased transparency of custodians of encrypted assets, believing that the platform “should let users understand” how the custodial service plans to solve problems related to fraud and theft.
The blog further requires a framework for reporting trading activities to avoid market manipulation and ensure customer protection. FTX also pointed out the need to supervise the issuance of stablecoins:
“On request, platform operators that allow the use of stablecoins for transaction settlement explain the criteria that platform operators use when deciding which stablecoins they allow for such purposes.”
In August, FTX CEO Sam Bankman-Fried announced the exchange’s aggressive measures to simplify its Know Your Customer (KYC) business.
Citing the importance of KYC tools to the mainstream adoption of cryptocurrencies, Bankman-Fried has enabled a new feature on FTX that confirms the user’s jurisdiction based on the user’s registered phone number:
“We check the user’s phone number against the name submitted by the user in KYC1 to further verify them. When this does not work or there is no data, we will ask KYC2 to access certain features of the website, including futures.”