After googling it, CFTC boss says DeFi is a ‘bad idea’ and probably illegal
June 9, 2021. Summarized by summa-bot.
Compression ratio: 41.1%. 1 min read.
During a June 8 keynote address, CFTC commissioner Dan M. Berkovitz stated DeFi derivatives markets are a “bad idea” and that he doesn’t see “how they are legal under the CEA.”
Speaking as part of a June 8 keynote address dubbed “Climate Change and Decentralized Finance: New Challenges for the CFTC,” Berkovitz notes that:
“Not only do I think that unlicensed DeFi markets for derivative instruments are a bad idea, but I also do not see how they are legal under the CEA. ”
Berkovitz noted that the “CEA requires futures contracts to be traded on a designated contract market (DCM) licensed and regulated by the CFTC,” however he asserts that no DeFi platforms are registered as DCMs or SEFs.
During the keynote, the commissioner emphasized the need for regulators to become familiar with DeFi derivatives and other applications amid the booming growth of the sector.
"If you type “DeFi” into Google search, a top link is to a CoinDesk article, 'What is DeFi?';" he said. "[It's] an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries. ”
“In my view it is untenable to allow an unregulated, unlicensed derivatives market to compete, side-by-side, with a fully regulated and licensed derivatives market,” he said.
Berkovitz questioned the argument put forth by DeFi proponents that cutting out intermediaries can offer investors better returns and more “control over their investments. ”