• CFTC Chair Rostin Behnam clarified that DeFi applications must follow all financial regulations.
• The CFTC’s stance raises questions about how it will enforce regulations on autonomous, non-compliant DeFi platforms.
• US government agencies don’t agree on which agency has jurisdiction over crypto assets.
CFTC Chairman Clarifies Stance on Defi
The Commodity Futures Trading Commission (CFTC) Chairman, Rostin Behnam, recently clarified the agency’s view on Decentralized Finance (DeFi). He emphasized that DeFi must comply with all financial regulations, despite being „just code.“ Furthermore, he suggested that the agency will probe into who is behind DeFi apps to ensure compliance.
Regulatory Crackdown
As centralized exchanges bore the brunt of the latest US regulatory crackdown, DeFi remained undisturbed. However, according to the remarks by CFTC Chair Rostin Behnam, this may soon change. He explained that the anonymity and self-executing nature of DeFi won’t shield developers from regulators and underlined that real question is what these protocols do and who ultimately runs them.
Enforcing Regulations
The CFTC’s stance raises questions about how it will enforce regulations on autonomous, non-compliant DeFi platforms. This is because US government agencies don’t agree on which agency has jurisdiction over crypto assets. Notably, the Securities and Exchange Commission’s (SEC) jurisdiction overlaps with CFTCs as SEC Chair Gary Gensler claims all crypto assets except Bitcoin are securities.
Conclusion
Ultimately, while some have argued traditional regulation doesn’t work in the case of Decentralized Finance due to its self-executing nature without intermediaries; according to CFTC Chair Rostin Behnam it must still comply with financial rules and regulations – raising questions about enforcement for those who remain anonymous or non-compliant in their operations.
References
Marsanic D., Trapp S., & Lawler C.(2023 May 19).CFTC Chair: Anonymity Won’t Protect DeFi from Regulators Retrieved from https://cointelegraph.com/news/cftc-chair-anonymity-wont-protect-defi-from-regulators