- US CFTC Commissioner has asked to crack down on ‘illegal’ DeFi projects.
- He noted in the session that regulators need to prepare to protect the public.
- For this reason, regulators need to focus more strongly on the new technology.
Dan M. Berkovitz, Commissioner of the US Commodity Futures Trading Commission has asked to crack down on ‘illegal DeFi projects. He shared this and his concerns about DeFi during a keynote address on June 8.
The speech was titled
“Climate Change and Decentralized Finance: New Challenges for the CFTC”.
In his speech, he referred to how fast DeFi had grown in recent years and the billions of dollars put into the industry. About this, he noted how dangerous it had become for policymakers to not take seriously DeFi’s potential and threats for the finance industry.
Other than this, he urged federal regulators to become familiar with the new technology. He said they needed to prepare to protect the public against misuse.
As per his research on Google and Wikipedia, Berkovitz came to the conclusion that DeFi is an umbrella term for many financial applications. They are crypto or blockchain-based and disrupt the current finance system. With regard to this, he added that banks and other traditional financial institutions have been developed over centuries. This makes them trustable as well as experienced in giving financial service.
In contrast, with DeFi, these benefits do not exist, he argued.
“Not only do I think that unlicensed DeFi markets for derivative instruments are a bad idea, I also do not see how they are legal under the CEA. Apart from the legality issue, in my view it is untenable to allow an unregulated, unlicensed derivatives market to compete, side-by-side, with a fully regulated and licensed derivatives market,”
The commissioner ended his address on the note that the CFTC needs to tighten scrutiny on possible regulatory violations. Other than that, he said that should focus more on this “growing area of concern.”
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