A high-ranking pro-Bitcoin (BTC) official from the U.S. Securities and Exchange Commission (SEC) says regulating decentralized finance (DeFi) is “impractical.”
In a new speech at a Duke University Digital Assets Conference, Commissioner Hester Peirce says that the way DeFi is designed presents lawmakers with many challenges.
“DeFi admittedly presents challenges to us regulators who are used to regulating companies, which are easy to cajole, monitor, and sue. Regulating people who write code is more difficult from a practical and legal perspective, including because it would impinge on free speech and would raise fairness issues since open-source coders cannot exercise control over how their code is used.
Regulating individual DeFi users would be impractical. Requiring the front ends of DeFi protocols — essentially interfaces allowing users to easily interact with the base code — to register under the securities laws also would be problematic.
Attempts to force DeFi into a traditional regulatory framework likely would produce a system in which a few large companies operated registered DeFi front-ends. Sounds a lot like centralized finance.”
Peirce goes on to say that Congress should decide whether federal crypto regulations need to increase, and if so, which agencies should have jurisdiction.
“Of course, Congress, which is directly accountable to the American people, should decide whether federal regulation is necessary, and, if it is, which agency should regulate.”
She says the federal government should not have a knee-jerk reaction to the crypto scandals of 2022 and impose onerous regulations, but instead foster crypto innovation.
“Last year was so brutal for crypto that some people want to relegate it to the dustbin of failed experiments. Rather than swiping left on crypto, we should remember that new technologies sometimes take a long time to find their footing.
What kind of country would we have if regulators prohibited people from experimenting with technologies that other people think are stupid or meaningless or even ones that could cause harm?”
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