Sam Bankman-Fried, founder and CEO of cryptocurrency exchange FTX, took to Twitter to calm the waters after his proposal for a regulatory framework for crypto made waves earlier this week.
The influential crypto billionaire posted a extensive Twitter thread on Saturday, addressing some of the concerns that members of the crypto community had the blog post he shared on Wednesday.
One user on Twitter classified the proposal as a step backwards, going so far as to say that SBF’s goals “are not aligned with most of the early adopters” of crypto.
“Thanks to everyone who provided constructive feedback, comments and criticism… I have already revised my post, and will continue to do so,” he wrote. “Special thanks to everyone who highlighted the core of crypto: financial freedom. The freedom to own your own assets; to own your own data; to build your own programs.”
The setback illustrates an excitement among members of the crypto community about what the future holds for the nascent industry. Any regulation imposed by the US would have serious implications, whether it spurs mainstream adoption or erodes some of the principles on which cryptocurrencies were founded, such as decentralization and censorship resistance.
The FTX chief had originally written that “in a perfect and logical world” both centralized and decentralized applications should “respect OFAC’s sanctions lists”.
ShapeShift founder Erik Voorhees was recognized for his feedback, which represented one of the more robust critiques of Bankman-Fried’s proposal. Voorhees accused the CEO of glorifying the US Office of Foreign Assets Control (OFAC).
“You can advocate effective altruism, or you can advocate banning 80 million innocent Iranians from the future of global finance,” Voorhees tweeted. “You can’t do both.”
Vorhees published an extensive blog post deconstructing Bankman-Fried’s proposal, arguing that there should be a line between blacklists that can help reduce fraud and theft as opposed to those that are “compulsorily imposed on all market participants.”
“I have sympathy for innocent people trapped in broader blocks,” Bankman-Fried responded. “It’s a political conversation worth having.”
Vorhees also took issue with the proposal to govern decentralized protocols under the Bank Secrecy Act. He wrote: “Sam’s suggestions regarding defi are the most problematic [part] of his blog.”
According to Vorhees, the SBF proposed that websites that allow individuals to view, read and write to a DeFi smart contract should be required to have a license, which would prevent hobbyists and enthusiasts from being able to experiment and create new projects.
Requiring a license or compliance program would also make it so that only well-funded companies would be able to write financial software. Vorhees wrote, “the simple cost of compliance is a six-figure sum per year.”
SBF had initially stated that regulation for DeFi is one of the most difficult areas to achieve. In his update, he clarified his first blog post and tried to tie it more strongly to DeFi.
“It is not make claims about what DeFi developers, smart contracts and validators must do,” SBF wrote. “It is looking to eventually establish guidelines on how e.g. FTX’s platform – or Fidelity’s – can communicate with DeFi contracts.”
Another name mentioned in SBF’s thread was crypto investor Ryan Sean Adams, who delivered pointed criticism on Wednesday. Adams said it is not reasonable to require DeFi to comply with OFAC and the front end of DeFi projects to register as a broker-dealer. Adams also took issue with the normalization of asset freezes.
“This is absolutely sick,” Adams said. “This would eliminate the US from the crypto race.”
SBF expressed a commitment to developing a dialogue around regulation and listening to what others have to say about the impact of a regulation.
“I fully understand that many people will disagree with me on various points,” he said. “It’s great – it means I have people to learn from.”
The penultimate entry in his thread showed a clip from a BitBoy Crypto livestream, where Ben Armstrong spoke emotionally about the tension between so-called “suits” and average people regarding the regulatory future of the cryptocurrency industry.
“It is a great honor to see the passion and intensity with which Bitboy regards me,” SBF stated. “Maybe one day I’ll feel as strongly about something as he does about me.”
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