SAM BANKMAN-FRIED CRYPTO REGULATION RECOMMENDATIONS

Since the 2017 crypto bull run, there have been several debates regarding which cryptocurrencies are securities and commodities. Bitcoin has stood the test of time and it is classified as a commodity. The formal SEC official suggests Ethereum is also a commodity but it is not official. You should know that any crypto that is tagged to be security gets delisted from any crypto exchanges in the US. As you know most crypto investors are in the US, and a coin that is tagged security will go through a hard because the crypto will be made inaccessible to US investors.

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For the main time, FTX will have its legal team assess to find out whether they meet up with the requirements of the Howies test. There are four criteria in the Howies test for a crypto to be tagged as security. The most important criterion is the expectation of buying that crypto is coming from no third party. The CEO of FTX Sam Bankman-Fried said FTX.us will delist any crypto that meets all four criteria of the Howies test and those that don't meet the requirements for the Howie test will be classified as a commodity. You should know that SEC has not been using the Howie test to determine which crypto is security, they are choosing which crypto project to go after.

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Someone like Gary Gensler who is the chairman of the SEC believes that centralized stablecoins are security. This is very illogical because there is more expectation of a profit of an asset to help to maintain a stable value. It leaves us wondering what FTX will do if USDC is classified as a security. Another thing to consider is tokenized stock, tokenize stocks are the ideal way to access assets and different exchanges got into trouble last year, most especially this Binance. Sam Bankman-Fried is advocating that the middleman in every stock trade should be removed with a transparent decentralized blockchain for instant settlement.

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Sam's attention on tokenize stock could be taken as a bullish sign for Solana because the project goal is to become an alternative to centralize stock exchanges like the Nasdaq. Another recommendation by Sam and FTX is related to consumer protections and disclosure by crypto firms and projects. It is because they want crypto projects and companies to disclose what they do and get sanctioned when they trick investors. Sam and FTX also recommend that retail investors should be prevented from taking a huge amounts of loans when investing in crypto.

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Sam and FTX recommend that DeFi should be regulated and Sam said it is hard to quote think about the context of existing financial regulations. I think the DeFi platform shouldn't be subject to a new set of regulations. Sam also recommends that all stablecoins should be backed by the same amount of fiat currency that represents. The big question is that what effect will Sam's recommendation have on the crypto market if they became law? Sam and FTX's post was just a starting point around crypto regulations. Sam is also open to feedback from the crypto community and it is a good sign that he is taking the crypto community seriously.