SEC encourages DeFi executives to meet and speak

SEC Commissioner Caroline Crenshaw has publish “DeFi Risk, Regulation, and Opportunity Statement” from November 9th advises decentralized financial platforms to contact them.

She admits that cryptocurrencies are now part of the United States, be it in news, social media, entertainment, or in portfolios.

In an effort to clarify DeFi’s regulatory status in the country, the report said many DeFi products are very similar to those found in traditional financial markets. In late August, the SEC teamed up with blockchain analytics firm AnChain.AI to oversee the DeFi space.

Although there are many warnings about the risks associated with DeFi, it still suffers from the structural limitations of unregulation.

“The current ‘Buyer Beware’ approach of DeFi participants is not the right basis for building a newly designed financial market.”

She added that the SEC was one of many agencies for DeFi, and securities in particular, but no DeFi platforms were yet registered with the Commission. As a result, participants are left unprotected by any regulatory framework that applies to traditional finance.

Crenshaw encouraged DeFi operators to contact the Commission’s FinHub for expert advice on their position on regulations. While enforcement is not the preferred route, the SEC wants more projects to voluntarily comply.

In her view, there are two main structural obstacles: a lack of transparency and anonymity. The lack of transparency has created a “two tier market” which results in professional investors and insiders “getting back outstanding returns”. In contrast, retail investors take more risk, have lower ratings, and are “less likely over time”.

This has happened on several projects that already have large VC investments and are now run by these whales who hold the most tokens.

It’s a long road

Overall, the sentiment is positive that the SEC is poised to work more closely with the emerging DeFi sector to help mature it. However, as the actual legal requirements are still vague and unclear, there is still a thorny road ahead of us.

Crenshaw concluded that the agency had actively had helpful discussions with DeFi experts and that the door had remained open but made no promises of an easy or quick process.

At the time of writing, $ 179 billion is locked in DeFi, according to Dappradar.

Source: Dappradar

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