Coinbase CEO Brian Armstrong is urging DeFi protocols to take legal action against the United States Commodities and Futures Trading Commission (CFTC), should they feel that their decentralized finance protocols are unjustly subjected to enforcement measures by the regulator.
Armstrong believes that DeFi protocols do not fall under conventional financial service businesses, questioning whether the Commodity Exchange Act is even applicable to them. He advocates taking cases to court in order to better understand applicable law and to create legal precedent for the industry.
Both Armstrong and Commissioner Summer Mersinger have voiced their backing of the DeFi protocols. Mersinger has expressed her difficulty seeing the CFTC lean towards enforcement actions in lieu of engaging with the public and delivering transparent regulations. Yet in June 2023, a federal judge ruled in the CFTC’s favor in a case against Ooki DAO, ultimately resulting in a fine totaling more than $600,000.
The legal determination may only increase the already heightened regulation that cryptocurrency companies have experienced in recent months by authorities such as the SEC. This intensifying scrutiny has spawned investigations into major cryptocurrency-financial players, such as Coinbase and Binance. Will SEC Chair Gary Gensler have the final say in regulating this industry?
