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- CFTC Chairman Rustin Behnam outlines the agency’s view on DeFi.
- DeFi must comply with all financial regulations, despite it being “just a token”.
- Behnam suggested that the agency investigate who is behind the DeFi apps.
Centralized exchanges have also borne the brunt of the latest US regulatory crackdown. DeFi remained undisturbed. However, according to the CFTC chair’s latest remarks, that may change soon. He said that the anonymity and self-executing nature of DeFi will not protect developers from regulators.
On Thursday, May 18, CFTC Chairman Rustin Behnam clarified the agency’s position on DeFi regulation. In an interview with Bloomberg, Behnam confirmed this DeFi must comply with financial regulations.
CFTC Chair: It’s about who set up DeFi applications
Supporters have long argued that traditional regulation does not work in the case of DeFi. operates its own independent operations Smart contracts without the need for intermediaries. This is why supporters are wondering if regulators can tackle the sector.
Despite these concerns, CFTC Chairman Rustin Behnam made it clear that DeFi applications must follow all of the financial rules in place books.
“It’s easy to suggest, ‘Oh, there’s no institution, there’s no individual, it’s just code, and you can’t regulate that, it’s self-inflicted,'” Behnam explained. However, he suggested, these are not the right questions to ask.
The real question, Behnam explained, is what these protocols do and who ultimately runs them.
“It’s really about what are U.S. customers being offered and exposed to,” he underlined. “And who is either the individual or group of individuals who set up that entity, that code, to offer those products?” he said.
The developers and investors behind DeFi applications are often anonymous individuals. Developers and investors often hold the controlling stake in a DeFi application. This enables them to change the rules at will.
on the flip side
- The CFTC’s position raises questions about how the regulations will be applied to independent and non-compliant DeFi platforms.
- US government agencies do not agree on which agency has jurisdiction over crypto assets. Notably, the SEC’s jurisdiction overlaps with CFTCs. Specifically, claims SEC Chairman Gary Gensler All crypto assets Except Bitcoin are securities.
Why is this important
As the DeFi space expands, understanding the regulatory landscape becomes critical for platforms and users alike.
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