The CFTC is considering regulating decentralized finance (DeFi), according to the body’s chairman, Rostin Behnman. Decentralized exchanges (DEXs) may be subject to CFTC or SEC regulation in the future. The question of the classification of cryptocurrencies as commodities or securities also remains a matter of concern that will require special consideration.
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The CFTC wants to look into a regulation of DeFi
Interviewed at the microphone of Bloomberg, Commodities Futures Trading Commission Chairman Rostin Behnmansaid decentralized exchanges (DEXs) will be regulated by either the CFTC or the Securities and Exchange Commission (SEC) someday.
Although, as their name suggests, DEXs are decentralized and therefore autonomous, the chairman of the SEC assures that this type of platform is absolutely not impervious to regulations aimed at covering American investors as is the case for centralized platforms.
“It is easy to suggest that there is no institution, that there is no individual, that it is only code, that it cannot be regulated, that it feeds itself, but that’s the wrong question. It really comes down to what is offered to US customers and what they are exposed to. And who is the individual or the group of individuals who created this entity, this code, to offer these products. […] We will continue to hold bad actors to account. »
Rostin Behnman was also asked about leaked internal conversations at Binance, one of the reasons the platform was the subject of a CFTC complaint:
“We know there are a lot of people who don’t want to obey the law, who choose to evade it, or who don’t know the law – and sometimes they do surprising things, including writing things down. »
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Crypto, a commodity or a security?
When asked what status should be given to a cryptocurrency from the point of view of regulators, the president of the CFTC refers to the famous Howey test, to determine whether a transaction can be qualified as a security. If ever a cryptocurrency is qualified as such, then it becomes de facto subject to applicable federal laws.
“When we think about the issue of securities versus commodities, and I know Congress is considering this issue, we have raised it, digital financial assets have many characteristics that are common to traditional financial assets. But there are certainly many characteristics that are unique and that I think require a unique set of thinking and political ideas about how and whether we should regulate them. »
Finally, he indicated that the various regulators still had to work on the thorny question of the hypothetical transformation of a token into a commodity when it previously corresponded to the evaluation criteria of a security. A scenario unknown to traditional financial marketswhich should require a unique set of political thoughts and ideas on how and whether to regulate them “.
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Source: The Block
Image source: Brookings Institution via Flickr, CC BY 2.0
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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