The White House’s annual economic report included a digital assets section on March 20. The authors deserve praise. I agree with the report that parts of the digital asset ecosystem are harming consumers, financial systems, and the environment. As a digital asset builder, I disagree that “crypto assets currently do not offer widespread economic benefits.”
The White House report’s omissions reveal how it will regulate digital assets. The report’s “Top Ten Crypto Derivative Platforms by Open Interest” list was particularly outdated. BingX, Deepcoin, and BTCC Futures were offshore.
Most digital asset proponents agree with the report that these exchanges are untrustworthy and open interest is easily manipulated, but it’s irrelevant. Why the White House report focused on offshore exchanges with no checks and balances and no US users is the real question.
It’s telling that they ignore the largest derivatives product available to U.S. users, the Chicago Mercantile Exchange’s Bitcoin 27,605 and Ether $1,758 futures, which have been vetted and approved by the Commodities Futures Trading Commission to launch safely and regulated (CME).
The CME, which complies with all U.S. laws and regulations, recently launched Micro Bitcoin and Micro Ether futures, allowing retail investors to trade a safe, regulated, and U.S.-based futures derivative product. Could it be because the CME only lists commodities, casting doubt on the SEC’s classification of ETH as a security?
The White House platforms also lack crypto-native investor recognition. Another omission is telling. There are few derivative exchanges on the market, and none of them seem to have filled the void left by FTX.
The White House report ignores Deribit, the largest options exchange by volume and open interest. The Netherlands-based company is transparent and focused on education and outreach. Why was it excluded? In order to portray digital assets as risky, the White House is excluding legitimate businesses from the derivative platform list.
Futures and options are essential to financial systems. A thriving digital asset economy with derivatives and options markets would benefit the U.S. and White House. I agree that the White House report exchanges are risky. The White House is overlooking decentralized finance, a transparent, noncustodial, cryptographically secure, and open-source alternative that cannot be ignored (DeFi).
DeFi users control their funds, so there are no “entities” to regulate. Most DeFi requires collateral and limits leverage: Unlike fractional reserve banking, lending protocols are overcollateralized and instantly auditable.
The U.S. SEC and CFTC’s unclear regulations stifle derivatives innovation. Most DeFi protocols should follow self-regulatory organizations like the Financial Industry Regulatory Authority to protect users. Any industry needs clear regulations, but enforcement stifles innovation. As a digital asset builder, I see how the lack of clarity is making it impossible for any U.S.-based entity to enter the U.S. market.
Digital asset advocates know about financial crises. Most of us experienced the post-2008 bank deregulation hellscape. We want to build a transparent, secure financial infrastructure from scratch. Offshore centralized exchanges are the new shadow banks, and DeFi is encrypted mathematically.
DeFi builders want the most secure financial system ever. We empower global citizens, not private banks or runaway financiers. We’ll work with governments, central banks, and regulators, despite U.S. regulators’ opinions. We need to know you’re arguing honestly.