Bahamian-based crypto exchange, FTX, unleashed a list of principles and proposals to enable the regulators and policymakers to create the best regulatory framework. This policy recommends the market-structure choices that were made by many leading cryptocurrency exchanges and supports its implementation across all jurisdictions.
FTX exchange shared the “FTX’s Key Principles for Market Regulation” blog after Maxine Waters invited many CEOs of major cryptocurrency companies to testify on the pertinent topic of digital assets and the future of global finance. Maxine Waters is the chair of the House Committee on Financial Services.
The “FTX’s Key Principles for Market Regulation” blog features a 10-point proposal that aims to help US regulators to create a crypto-centric regulatory infrastructure. Out of these 10 key principles, one notable recommendation calls for an alternative regulatory approach that supports a unified regulatory regime for the spot and derivatives marketplaces. Based on that blog:
“The regulatory label on a given product or market need not change the core goals of regulation, and the same rulesets should generally apply across all markets.”
FTX also says that there is a need for direct membership market structures that will enable entities to perform regulated trades without having to involve a third party. The crypto exchange also suggests a regulation that demands great transparency around the custodians of cryptocurrency assets, saying that the platform “users should be given visibility” into how the custodial services want to address the issues related to theft and fraud.
The blog also demands infrastructures for reporting transactional activity to avoid issues of market manipulation and guarantee customer protection. FTX also pointed out that there is a need for regulating stablecoin issuance:
“A platform operator that permits the use of stable coins for settlement of transactions should be required to explain the standards the platform operator uses in deciding which stable coins it permits for such purposes.”
In August 2021, FTX CEO Sam Bankman-Fried said that the exchange’s proactive measures to streamline its Know Your Customer (KYC) operations. Referring to the importance of KYC tools for crypto’s mainstream adoption, Bankman-Fried inaugurated a new feature on FTX that proves the user’s jurisdiction based on their registered phone number:
“We check users’ phone numbers against their submitted names in KYC1, to further verify them. When this doesn’t work or there isn’t data, we’ll require KYC2 to access some features of the site, including futures.”