Coinbase Pushes for Clearer Rules on DeFi and Stablecoins with CFTC

Highlights:

• Coinbase is pushing for clearer U.S. rules on DeFi, stablecoins, and crypto platforms.
• The exchange supports allowing stablecoins as collateral in futures markets to boost liquidity.
• The CFTC’s regulatory engagement with crypto firms fosters innovation and user safety.

One of the largest cryptocurrency exchanges in the U.S., Coinbase, has submitted key recommendations to the Commodity Futures Trading Commission (CFTC) regarding regulations of decentralized finance (DeFi), derivatives, and the usage of stablecoins as collateral in U.S. markets. This submission responds to a request by the CFTC to seek public feedback regarding updating its rules concerning digital assets. In particular, as a response to the Presidential Working Group Report on Digital Assets.

Coinbase Pushes for Clearer DeFi and Stablecoin Regulations

Faryar Shirzad, the Chief Policy Officer of the company, emphasised that the DeFi sector, stablecoins, and all-in-one crypto platforms require more explicit regulations. Coinbase proposed that existing laws, built around centralized institutions, no longer apply to blockchain-based markets. They suggest the development of a regulatory framework that is specific to decentralized protocols. This would be useful in sustaining innovation as well as providing user protection and transparency.

Coinbase recommended recognizing stablecoins as acceptable collateral in the futures markets. The company said that the use of stablecoins as collateral would enhance liquidity and decrease counterparty risk in the U.S. derivatives market. CFTC recently launched a consultation on stablecoins as tokenized collateral for the derivatives market, indicating increased regulatory emphasis on this field.

Coinbase’s Vision for All-in-One Crypto Platforms

Another important part of Coinbase’s submission is that it supports vertically integrated trading platforms. These platforms integrate brokerage, clearing, and exchange services and have the potential to save costs and provide faster execution. However, Coinbase demanded a high level of conflict-of-interest regulation to guarantee transparency and prevent abuse. Through these measures, Coinbase is confident that such platforms can enhance market efficiency without jeopardizing safety.

The submission of the exchange corresponds to the increasing desire of the CFTC to cooperate with new forms of crypto trading platforms. The support of stablecoins to use as collateral and their advocacy of a more practical regulatory model for DeFi derivatives. This consequently indicates that Coinbase believes in a more welcoming, innovative crypto-regulation model.

CFTC’s Role in Shaping U.S. Crypto Regulations

The proposals of Coinbase arrive when there is a growing bipartisan interest in defining U.S. crypto regulations more clearly. Coinbase emphasized that regulatory certainty would aid the U.S. in sustaining its competitiveness in the international derivatives market. This is especially following regulatory advancements in regions such as Singapore and the European Union.

Besides the recommendations by Coinbase, the CFTC has been actively working to shape the future of crypto regulation. Recently, the agency created the CEO Innovation Council, which plans to further investigate crypto and prediction markets regulation. Additionally, acting CFTC Commissioner Caroline Pham expressed the importance of the CFTC and SEC collaborating to develop a uniform strategy to regulate digital assets.

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