SEC boss says DeFi platforms are ‘highly centralized’ and will need to register

DeFi projects attracts 2.91M Ethereum addresses
DeFi projects attracts 2.91M Ethereum addresses

SEC boss says DeFi platforms are ‘highly centralized’ and will need to register – Gary Gensler, chairman of the U.S. Securities and Exchange Commission stated that DeFi is highly centralized in certain aspects and urged projects working in the sector to register with the SEC.

Speaking to The Wall Street Journal on Aug. 19, Gensler suggested that the decentralized notions implied by the term DeFi were “a bit of a misnomer,”:

“These platforms facilitate something that might be decentralized in some aspects but highly centralized in other aspects.”

While DeFi projects are designed to be autonomous platforms that operate without a centralized authority, Gensler asserted that many are developed and controlled by a centralized team who are incentivized to promote their platforms.

“There’s still a core group of folks that are not only writing the software, like the open-source software, but they often have governance and fees,” he said, “there’s some incentive structure for those promoters and sponsors in the middle of this.”

Gensler expanded on his comments in an Aug. 20 interview with Fox Business and suggested that such DeFi projects are centralized enough to fall under the scope of regulation. He urged DeFi projects to register with the SEC:

“These so-called decentralized finance platforms actually have a lot of centralization. There’s a group of entrepreneurs that are running these platforms. They should come in and to that extent work with us and get registered.”

Earlier this month, SEC commissioner Hester Peirce — colloquially known as “Crypto Mom” — echoed similar sentiments from a different angle when she warned of “shadow-centralization” within the DeFi sector.

Peirce stated that “If regulators can find a centralized part or group of people that they can grab hold of, they will grab hold of them,” as she urged for caution in how projects are built from the ground up.

“If you want to be decentralized, you really need to be decentralized, and that is going to then put you in a different category from the perspective of regulators because that’s just not something that we’ve dealt with before,” she said.

It was gathered on Aug. 3 that Gensler had identified several crypto policy changes that are being examined by the SEC, including matters concerning DeFi, lending platforms, token offerings, stablecoins, exchange-traded funds and custody.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Financial Watch. Every investment and trading move involves risk. You should conduct your own research when making a decision.

About Sam Gabriel 1699 Articles
Samson Gabriel a graduate of mass communication from Auchi Polytechnic, he is a passionate writer with experience in radio scrip writing. He brings his experience from the broadcast media into play here as he continues to enjoy his passion as a journalist. He can be contacted via whats-app on: +234701105670

Be the first to comment

Leave a Reply

Your email address will not be published.