Sam Bankman-Fried draws fire from DeFi proponents after regulation proposal

  • Various individuals in the blockchain and cryptocurrency industry are lambasting Sam Bankman-Fried after the FTX CEO shared a regulatory proposal that, critics claim, hamstrings decentralized finance.
  • Defenders of Bankman-Fried’s proposal cite the inevitability of regulation, as well as its supposed necessity to onboard public companies into crypto.
  • Decentralized finance proponents have taken to Twitter to criticize Sam Bankman-Fried after the FTX CEO shared an “industry norms manual” that suggested websites facilitating trading on decentralized exchanges should be regulated.

    Bankman-Fried’s suggestion of regulation for tools enabling retail traders to access DeFi protocols triggered horror among those who argue apps like Uniswap are simply software, not a legal entity that can be censured. To DeFi proponents, these decentralized exchanges (DEXs) are different beasts to the classic central counterparties required in traditional finance: they exist purely as code allowing individuals to trade with one another.

    “If you host a website that makes it easy for U.S. retail to connect to and trade on a DEX, you would likely have to register it as something like a broker-dealer/FCM/etc. You would also potentially have KYC [know your customer] obligations,” Bankman-Fried wrote on Wednesday. At the same time, the crypto exchange executive said it’s “extremely important that on-chain code and Defi remain free and open, and uncensored.”

    One particularly loud voice is that of scupytrooples, the pseudonymous founder of DeFi protocol Alchemix, who tweeted a list of unsubstantiated complaints against Bankman-Fried.

    “I see them using the playbook of large corporations, where they ascend to the top, and then get involved in lobbying to make rules favorable for them to hurt the competition, and ultimately cement their position there,” scupytrooples told The Block in separate comments. “No different from Amazon, Exxon Mobil, Goldman, etc.”


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