FTX Proposes Regulatory Framework for Cryptocurrency Exchange Markets

Setting the Stage for Cryptocurrency Regulation

In an effort to bring some order to the wild west of cryptocurrency, the Bahamian exchange FTX has rolled out a comprehensive proposal aimed at guiding policymakers on how to effectively regulate digital assets. Following a recent call from Maxine Waters, the chair of the House Committee on Financial Services, FTX’s blog post titled FTX’s Key Principles for Market Regulation emphasizes the necessity for a structured regulatory framework that is consistent across various jurisdictions.

The Ten Commandments of Crypto Regulation

Among the ten key principles outlined, one standout recommendation advocates for a unified regulatory approach encompassing both the spot and derivatives marketplaces. FTX argues that the nature of the product shouldn’t necessitate different rules:

“The regulatory label on a given product or market need not change the core goals of regulation.”

Direct Membership: Ditching the Middleman

Another intriguing suggestion from FTX is a direct membership market structure. Imagine being able to trade your digital assets without dealing with third parties—sounds like a dream, right? This proposed change aims to cut out the middleman, allowing entities to engage in regulated trades more efficiently.

Transparency in Custody: No More Secrets

Let’s address the elephant in the room: custody of crypto assets. FTX is pushing for more transparency from custodians, arguing that users deserve to know how their assets are protected. According to their proposal,

“Users should be given visibility into custodial services’ measures against fraud and theft.”

Keeping an Eye to Prevent Market Manipulation

FTX also rightly highlights the importance of frameworks for reporting transactional activity. These reporting protocols aim to enhance customer protection and reduce fraudulent practices in the market. The proposal insists that market manipulation must be curbed through effective oversight.

Staying Stable with Regulated Stablecoins

On the topic of stablecoins, FTX believes that any platform that allows their use should be required to clarify the standards it applies when permitting particular stablecoins for transaction settlements. After all, what’s a stablecoin without a clear understanding of its backend operations?

KYC: Keeping the Bad Guys at Bay

FTX CEO Sam Bankman-Fried has been vocal about the importance of Know Your Customer (KYC) measures. Back in August, he unveiled a new feature that uses phone number verification to streamline the KYC process for users. During his announcement, he stated:

“We check users’ phone numbers against their submitted names in KYC1, in order to further verify them.”

A Future for Cryptocurrencies?

As cryptocurrencies continue to gain momentum, the call for robust regulatory guidelines becomes increasingly significant. FTX’s principles aim to reassure users and regulators alike that a secure, transparent, and fair marketplace is within reach.