Coinbase CEO Brian Armstrong Advocates for DeFi Protocols to Challenge CFTC in Court
Coinbase CEO Brian Armstrong has weighed in on the recent enforcement actions taken by the Commodity Futures Trading Commission (CFTC) against operators of decentralized finance (DeFi) protocols.
Armstrong has called for these DeFi protocols to take legal action against the CFTC, emphasizing the importance of establishing legal precedents in the DeFi landscape.
Armstrong’s comments come in response to the CFTC’s recent enforcement actions, which included settlements with DeFi protocols Opyn, ZeroEx, and Deridex.
These protocols were ordered to pay civil monetary penalties ranging from $100,000 to $250,000. The charges primarily revolved around regulatory violations related to registration and compliance with the Commodity Exchange Act.
The CFTC should not be creating enforcement actions against decentralized (DeFi) protocols. These are not financial service businesses, and it’s highly unlikely the Commodity Exchange Act even applies to them.
— Brian Armstrong 🛡️ (@brian_armstrong) September 13, 2023
My hope is these DeFi protocols take these cases to court to…
Armstrong Argues Commodity Exchange Act doesn’t Apply to DeFi Protocols
In a statement shared on social media platform X, Armstrong asserted that the CFTC should refrain from initiating enforcement actions against decentralized finance protocols.
He argued that these protocols do not constitute traditional financial service businesses, and it is doubtful whether the Commodity Exchange Act even applies to them.
Armstrong believes that taking such enforcement actions against DeFi protocols could result in pushing an innovative and crucial industry offshore.
Armstrong’s hope is that DeFi protocols, like Opyn, ZeroEx, and Deridex, will choose to challenge these enforcement actions in court, with the aim of setting legal precedents in the rapidly evolving DeFi sector.
He expressed confidence in the willingness of the courts to uphold the rule of law and establish clarity in the regulatory landscape.
Coinbase itself has faced its share of regulatory challenges, notably with the Securities and Exchange Commission (SEC).
In June, the SEC filed charges against Coinbase related to various aspects of its business, including allegations of operating without proper registrations as an exchange, broker, or clearing agency.
