SEC Chairman Says DeFi Projects ‘Have a Lot of Centralization,’ Warns They Won’t Reach Full Potential Outside Regulatory Laws
Chairman of the U.S. Securities and Exchange Commission Gary Gensler is issuing a warning about the potential risks associated with the decentralized finance (DeFi) sector.
In an interview with Fox Business, Gensler says that while he and the SEC remain neutral on the innovative technology involved in Bitcoin and DeFi, he is concerned about the risks that the sector poses to investors. He argues that some decentralized platforms “actually have a lot of centralization” and that crypto projects should register their products with the regulatory agency.
“We focus on investor protection. We’re neutral about technology, Bitcoin, and the other crypto tokens … and their innovative technologies. But at the same time, we’re not neutral about investor protection. So if somebody is in a project that’s offering a security, they should come in, they should register.
These so-called decentralized finance platforms actually have a lot of centralization. There is a group of entrepreneurs that are running these platforms and they should come in and work with us and get registered.”
Gensler goes on to suggest that the DeFi field will not reach its full potential if companies and projects within the sector attempt to remain outside of a regulatory environment.
“This field is not going to reach any of its potential if it tries to stay outside of our laws. Our money laundering laws, our tax compliance laws and what we focus on at the FCC investor protection.”
As for how the chairman feels about a digital dollar, he prefers to leave the question up to the U.S. Federal Reserve, Treasury and Congress.
Gensler has previously expressed a concern that stablecoins could be used to avoid traditional banking rules.
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