SEC Commissioner Peirce: DeFi Is A Challenge To Crypto Regulation
According to U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce, true DeFi projects pose a challenge to crypto regulation. She said that “decentralized finance carries within itself inherently some ability to self regulate,” which the SEC should take into account as they design a regulatory system.
Hester Peirce, SEC Commissioner, recently discussed about cryptocurrency regulation in an interview with Yahoo Finance.
One of the discussion points was whether the SEC has any trouble keeping up with developments in the crypto space and protocols which are advancing and changing very quickly on a daily basis.
Her response was:
“There is certainly difficulty on the part of a regulator to stay on top of developments in defi [decentralized finance] and crypto more generally.
People shouldn’t assume that the SEC can only focus on one thing. The SEC has a lot of resources and can go after a lot of things simultaneously.”
She continued:
“So, be aware of that, and you need to be thinking about whether the securities laws apply to what you’re doing and consulting with lawyers when necessary.”
The decentralized world is one that is very new to us because we are used to dealing with large, usually large, centralized intermediaries. So true decentralized projects do pose a challenge
I think what I would caution people to be aware of is that sometimes something claims to be decentralized and isn’t, and there is actually a centralized entity, and I think certainly regulators will be looking to that centralized entity.”
Previously Gary Gensler, the SEC Chairman, also pointed out that many platforms claiming to be decentralized were actually centralized. He told Senator Elizabeth Warren in September that many platforms “are only decentralized in name only,” citing that “There is a user agreement.” In addition, he said many tokens listed on cryptocurrency exchanges are actually securities, telling Congress that they needed more regulation.
Peirce further explained:
“Decentralized finance carries within itself inherently some ability to self regulate. And I think we need to take that into account as we design a regulatory system.”
Regarding cryptocurrency regulation, the Peirce said:
“It is disconcerting to me that for three years now I’ve been asking for regulatory clarity and we can’t seem to provide any.
I think this is really becoming a huge barrier to this industry being able to develop in the way that’s safe but also in a way that allows innovation to happen. And it’s a real shame to me that we are not just taking up the mantle as regulators to develop a regulatory framework.”
