One user on Twitter classified the proposal as a step backwards, going as far to say that SBF’s goals are “not aligned with those of most of the early adopters” of crypto.
So your solution to the very real and challenging questions of how to properly regulate a technology that can revolutionize the financial system is to… turn it into the existing system? It seems as though your goals are not aligned with those of most of the early adopters.
“Thanks to everyone who gave constructive feedback, comments, and criticism… I’ve revised my post some already, and will continue to do so,” he wrote. “Thanks particularly to everyone who highlighted the core of crypto: economic freedom. The freedom to own your own assets; to own your own data; to build your own programs.”
The pushback illustrates a tension among members of the crypto community over what the future looks like for the nascent industry. Any regulations imposed by the U.S. will have serious implications, whether spurring mainstream adoption or eroding some of the principles upon which cryptocurrencies were founded, such as decentralization and censorship resistance.
The FTX CEO had initially written that “in a perfect and logical world,” both centralized and decentralized applications should “respect OFAC’s sanctions lists.”
The Founder of ShapeShift, Erik Voorhees, was acknowledged for his feedback, which represented one of the more robust criticism’s of Bankman-Fried’s proposal. Voorhees accused the CEO of glorifying the U.S. Office of Foreign Assets Control (OFAC).
@SBF_FTX you can advocate Effective Altruism, or you can advocate banning 80 million innocent Iranians from the future of global finance.
“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 there should be a line between blacklists that can help reduce fraud and theft as opposed to those that are “imposed coercively on all market actors.”
“I have sympathy for innocent people caught in broader blocks,” Bankman-Fried responded. “That’s a policy 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, SBF suggested that websites that allow individuals to view, read, and write to a DeFi smart contract should be required to have a license, which would stifle 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 amount per year.”
SBF had stated at the outset that regulation for DeFi is one of the trickiest areas to get right. In his update, he clarified his initial blog post and tried to link it more strongly to DeFi.
“It is not making claims about what DeFi devs, smart contracts, and validators must do,” SBF wrote. “It’s looking to eventually establish guidelines about how e.g. FTX’s platform—or Fidelity’s—could interface with DeFi contracts.”
8) In particular, it is *not* making claims about what DeFi devs, smart contracts, and validators must do. It’s looking to eventually establish guidelines about how e.g. FTX’s platform–or Fidelity’s–could interface with DeFi contracts.
Another name mentioned in SBF’s thread was crypto investor Ryan Sean Adams, who delivered pointed criticism on Wednesday. Adams said that it is not reasonable to require DeFi to comply with the OFAC and for the front-end of DeFi projects to register as a broker-dealer. Adams also took issue with the normalization of freezing assets.
“This absolutely sucks,” Adams said. “This would eliminate the U.S. from the crypto race.”
This absolutely sucks.
You’re saying DeFi should be OFACed.
You’re saying onchain freeze’s should be normal.
You’re saying DeFi front-ends to register as a broker-dealer.
The penultimate entry in his thread showcased a clip from a BitBoy Crypto livestream, in which Ben Armstrong spoke emotionally about the tension between so-called “suits” and average people regarding the regulatory future of the cryptocurrency industry.
18)While I don’t myself wear glasses, I’m excited to join our bespectacled brethren. It’s a huge honor to see the passion and intensity with which Bitboy regards me.