CFTC Commissioner proposes sandbox scheme for digital assets amidst crackdown on DeFi platforms

cyptouser6 months agoCryptocurrencies News155


Caroline Pham, a Commissioner of the U.S. Commodity Futures Trading Commission (CFTC), proposed that the financial regulator launch a pilot regulatory sandbox scheme for digital assets in a speech delivered before the Cato Institute on Sept. 7.

In the speech, Commissioner Pham highlighted how the U.S. hands-off approach has placed it behind other countries as regards the development of clear regulations for the blockchain and digital asset industry.

The Commissioner noted that a regulatory sandbox program tailored for the emerging industry would help to support the development of compliant digital asset markets and tokenization. She continued that the program would have input from major stakeholders in the field who would “ensure the integrity of our markets and impartial access, foster liquidity and competition, address potential conflicts and risks, and prevent fraud, abusive practices, and manipulation.”

She added:

“The CFTC should propose and adopt rules establishing a pilot program for a specific period of time that incorporates many of the components drawn from past pilot programs, including: registration and eligibility requirements, financial resources and other conditions, risk management, products and contract terms, and other requirements including disclosures and reporting.”

CFTC targets several DeFi platforms

Three DeFi platforms, Opyn, Deridex, and ZeroEx, have chosen to settle the unregistered derivatives trading charges filed against them by the CFTC. 

According to a Sept. 7 statement, the platforms paid fines ranging from $100,000 to $250,000 and were ordered to cease further law violations.

Ian McGinley, CFTC’s Director of Enforcement, said, “Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts.” McGinley added that the department would continue aggressively pursuing unregistered platforms operating within the U.S.

However,  CFTC commissioner Commissioner Summer Mersinger voiced her disagreement with the regulatory action, arguing that the regulator had not provided any grounds connected to fund misappropriation or other illicit activities.

Mersinger said:

“I am concerned that the Commission in these cases is taking another step down the path of bringing enforcement actions when we should be engaging with the public.”


The content on this website comes from the Internet. Due to the inconvenience of proofreading the authenticity and accuracy of the copyright or content of some content, it may be temporarily impossible to confirm the authenticity and accuracy of the copyright or content. For copyright issues or other issues caused by this, please Call or email this site. It will be deleted or changed immediately after verification.

related articles

CFTC settles charges against companies behind 0x (ZRX), two other DeFi protocols

The U.S. Commodity Futures Trading Commission (CFTC) announced settlements with multiple DeFi compan...

Balancer announces $27M may be at risk due to vulnerability in DeFi pools

The DeFi platform Balancer (BAL) disclosed a vulnerability affecting several of its pools in a state...

Silent Protocol ushers in a new era of DeFi privacy as Sora Ventures leads $5M round

Silent Protocol is a startup initiative spearheaded by researchers from TÜBİTAK BİLGEM, Turkey’s lea...

TRON ecosystem grows amid increasing DeFi activity

The TRON (TRX) network exhibited considerable growth in Q2 in daily active accounts, new accounts, a...

Kinetix eyes GMX’s path, aims to revolutionize Kava Chain with perpetual swaps

GMX launched in early September 2021 as a decentralized perpetual exchange offering swaps and leverage trading and it made a big splash in the DeFi community.

If you haven’t heard about GMX, let’s get you up to speed: GMX’s launch on Arbitrum was seen as a major DeFi milestone. Aside from proving Arbitrum as an effective Ethereum L2 scaling solution, GMX stood out for two big reasons:

  1. The first DEX and perpetual market to launch on the Arbitrum ecosystem.

  2. A shared liquidity pool system minimizes price impact on trades of all sizes without affecting the market price.

Within a month of launch, GMX grew its TVL to over $30 million, averaging ~$1.4 million in daily trades. GMX has evolved into a liquidity mining program, an NFT marketplace, and a yield farming platform. Its ongoing growth puts it at TVL of over $450 million and boasts a 24-hour trading volume of $1 million at the time of writing.

GMX’s growth and adoption also accrued value to the GMX token. The GMX token market price on Sept 13th of 2021 was $14.74. One month later, it was $22.33. A year later, it is $46.27, and at the time of writing, it sits at $36.66 — a more than 200% price appreciation since launch.

Looking back, it’s safe to say that GMX’s launch on Arbitrum was a great success. Demand for a decentralized perpetual market on Arbitrum was and still is – high.

But why did a perpetual market and shared liquidity pool system impact Arbitrum’s growth? And what does this have to do with Kinetix and Kava Chain?

Perpetual Propulsion

The evolution of DEXs and derivatives markets (like perpetual swaps) in crypto presents builders with novel tools to push DeFi forward and provide users with incentives for early adoption.

Kinetix Finance, a state-of-the-art v3 perpetual DEX, brings the same potential to Kava Chain that GMX brought to Arbitrum. The flywheel effect works like this: the launch of the first DEX and perpetual market protocol on an ecosystem creates positive market sentiment, which accelerates liquidity growth and user activity on the protocol and, by extension, its ecosystem.

GMX offered Arbitrum users the flexibility of perpetual swaps without an expiry, so it drew a larger pool of seasoned and novice traders into the ecosystem, contributing to more liquidity and activity.

This led to a surge in the TVL, reflecting a heightened capital allocation within the Arbitrum ecosystem. The non-expiring nature of GMX’s perpetual contracts stimulated higher trading volumes among these new users, who could adjust their positions without being bound by contract end dates.

This heightened activity enhanced the overall liquidity of Arbitrum and incentivized more people to onboard and participate in the Arbitrum ecosystem.

So why is Kinetix Finance ripe to experience the very same flywheel effect?

The Kinetix v3 DEX & Perpetual Market

The Kinetix team is building from their past successful experience with Quickswap, the largest DEX on Polygon for over 3 years, which at its peak had ~1.5 billion in TVL and ~1 billion in 24h trading volume.

For their next venture, they’ve decided to build on Kava Chain, a layer-1 blockchain that combines the speed and interoperability of Cosmos with the developer power of 

Kinetix eyes GMX’s path, aims to revolutionize Kava Chain with perpetual swaps

GMX launched in early September 2021 as a decentralized perpetual exchange offering swaps and levera...