As regulators take their own approaches to bringing order to the industry, U.S. lawmakers are divided over how to approach decentralized finance.
Lawmakers on the House Financial Services Digital Assets Subcommittee continued to debate how to regulate DeFi during a hearing Tuesday.
“As we consider how blockchain can be used in finance, we must continue to expand our knowledge of the possible costs and benefits associated with DeFi,” Rep. French Hill, the subcommittee chair, said at the start of the hearing.
Lawmakers have so far excluded DeFi regulation from recent legislation. In a bill passed by the House last year, lawmakers directed the Treasury, Securities and Exchange Commission, and the Commodity Futures Trading Commission to study DeFi. billled by republican It would give the CFTC new jurisdiction over “digital commodities” and would allow the SEC to oversee digital assets offered as part of investment contracts.
Meanwhile, the SEC revisited the proposed rule in 2022, expanding on the following: Exchange definition to capture decentralized exchanges. This rule could ultimately require decentralized projects to register with institutions as alternative exchange systems. repulsion In the cryptocurrency industry.
Regulators are also starting to crack down on DeFi. Uniswap Labs, the developer of decentralized exchange Uniswap, recently Received SEC’s Wells Notice. Last week, the CFTC filed and said it had settled. charge Uniswap is seeking $175,000 in damages for offering “illegal digital asset derivatives trading.”
At Tuesday’s hearing, Massachusetts Democratic Rep. Stephen Lynch said there is no “consensus definition” for DeFi among regulators or the industry itself. Lynch also criticized the crypto industry as a whole, saying it has been marred by “episodes of explosion” and called for legislation.
“This committee should have explored digital asset topics like DeFi and tokenization long before the bill was introduced,” Lynch said. “The FIT Act, which I strongly opposed, excluded DeFi services. I urge this committee not to pursue similar legislation that would legalize this industry and thus pose the same consumer and investor protection risks.”
Trump’s venture
Rep. Maxine Waters, the ranking Democrat on the House Financial Services Committee, has criticized the Donald Trump-backed cryptocurrency project World Liberty Financial. Trump’s sons, Donald Trump Jr. and Eric Trump, have backed a new DeFi project, but the specific details of what the project will entail are not yet finalized.
So far, the project has faced the following challenges: challenge. last week, Lara and Tiffany Trump’s X accounts have appeared. I got hacked You may share posts promoting tokens that claim to be associated with World Liberty Financial.
“Decentralized finance, or DeFi, aims to create greater efficiency and transparency, but it can also bring with it increased risks of hacks, fraud, misinformation, and conflicts of interest that can harm consumers and investors,” Waters said. “We’ve seen this play out with a new DeFi venture called World Liberty Financial, which Eric Trump and Donald Trump Jr. plan to launch.”
“The Ramwakers need to take responsibility for this,” Waters added.
Disclaimer: The Block is an independent media outlet providing news, research and data. As of November 2023, Foresight Ventures is the largest investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, influential and timely information on the cryptocurrency industry. Current financial disclosures are as follows:
© 2024 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.