Sam Bankman-Fried backtracks on the Crypto Regulatory Framework

FTX CEO Sam Bankman-Fried is refining — and in some cases rolling back — the regulatory framework for cryptographers he dropped last week, which he acknowledged is a work in progress.

Bankman-Fried last week published his views on how the crypto industry should be regulated. The document, called “Possible Digital Asset Industry Standards,” is an overview of how Bankman-Fried believes the industry should operate, from sanctions policy to token classification.

Crypto advocates were quick to criticize the standards. Erik Voorhees, founder of ShapeShift, wrote an open letter in response, arguing that Bankman-Fried’s proposal goes against the fundamental principles of crypto.

“For Sam to suggest that the industry ‘should respect OFAC’ is unseemly,” Voorhees wrote. “Anyone who truly advocates ‘an open, free economy’ cannot support such blatant economic discrimination against millions of innocent people.”

Bankman-Fried responded by saying he sympathizes with “innocent people caught up in broader blocs” of sanctions, “political conversation worth having.”

Others were keen to criticize the proposal’s stance on decentralized finance. Twitter users largely agreed that placing DeFi projects in the same regulatory framework as centralized companies would be a mistake.

“SBF is a great entrepreneur. But unfortunately, he is not the biggest champion of DeFi and those crypto place Twitter user said in response to the framework.

In a Twitter thread On Sunday, Bankman-Fried thanked opponents for their “constructive feedback” — adding that he would edit the original proposal as needed.

The FTX manager’s centralized exchanges must take responsibility for offering products to users who understand the risks and are able to make informed decisions.

“If you’re going to gate products on regulated exchanges, do it on understanding, not wealth,” he added, emphasizing the idea that traders’ abilities should not be determined by net worth.

The guidelines and response come as the US midterm elections approach. The industry is watching closely for candidates who can advance digital assets. Bankman-Fried in particular has been quick to open his wallet.

At the beginning of the year, the FTX boss ranked fourth among all US election megadonors, with a combined contribution of more than $39 million, according to data from the Federal Election Commission and Open Secrets. Bankman-Fried once said he could donate up to $1 billion during the 2024 election cycle, but has since backed off.

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