• Coinbase calls for clear regulations on DeFi and stablecoins to keep pace with market growth.
• The company advocates for stablecoins as collateral in U.S. derivatives markets to boost liquidity.
• Coinbase highlights the need for cooperation between the CFTC and SEC to clarify crypto regulations

Coinbase has submitted a series of policy recommendations to the Commodity Futures Trading Commission (CFTC), urging the agency to clarify regulations surrounding decentralized finance (DeFi), stablecoins, and all-in-one crypto platforms. These suggestions come as the CFTC reviews the current framework for regulating the crypto market, particularly after the release of the President’s Working Group Report on Digital Assets. Coinbase’s proposals aim to ensure the development of a robust, safe, and innovative crypto market.

Clarity on DeFi and Stablecoins Regulations

Coinbase has urged for more precise and well-defined regulations for the increasing DeFi sector and stablecoin usage. The firm points out that DeFi markets are developing at a phenomenal rate, but the present regulations are still insufficient to accommodate their growth. Coinbase suggests a realistic regulatory framework for DeFi derivatives markets to guarantee correct supervision. 

Additionally, the company urges that stablecoins be accepted as collateral in U.S. derivatives markets, arguing that stablecoin collateral would strengthen liquidity and enable continuous settlement, making markets more efficient. In its submission, Coinbase also addresses the need for regulations that would enable customers to benefit from all-in-one crypto platforms. The company stresses that such platforms could streamline operations and reduce costs for market participants. 

However, Coinbase maintains that these platforms should operate under strong conflict-of-interest protections to ensure a balanced approach between innovation and security. This recommendation follows the CFTC’s recent approval of Polymarket, a platform that operates as a U.S. exchange, signaling the agency’s increasing engagement with new types of crypto trading platforms.

The Role of Stablecoins in Strengthening U.S. Derivatives Markets

In their policy paper, Coinbase points out the need for U.S. derivatives markets to adopt stablecoins. The firm is of the opinion that stablecoins are going to be the very source of liquidity that turns out to be as good as giving the go-ahead for settling transactions anytime, no matter what time the market is. 

The CFTC is all set with its initiatives around stablecoin collateral for derivatives markets, and Coinbase is pushing for the U.S. to take this approach as a way to gain the upper hand in global derivatives trading. Coinbase has acknowledged the CFTC for its continuous involvement with the crypto industry and expressed that the CFTC’s principles-based regulatory framework is one that can adjust to the market’s evolution. 

The company also emphasized the necessity for the pairing between the CFTC and the SEC to unfold the regulation for the crypto space. Coinbase is convinced that this kind of partnership is what the crypto industry needs most in order to be responsible and also innovate. The crypto regulation discourse remains open, with Coinbase’s submission as a major milestone already in the direction of the digital asset markets’ future in the U.S.