The SEC chairperson has once again compared the rise of decentralised finance to the Wild West, emphasizing that it requires better investor safeguarding.
The budding DeFi industry is one of the most innovative domains in digital asset space, as per the United States SEC Chairman, Gary Gensler. Nevertheless, that doesn’t mean it can elude regulation, he added.
Speaking at the Yahoo Finance’s All Markets Summit recently, Gensler mentioned that while Satoshi Nakamoto “was pressing up against the definition of money, […] DeFi is starting to press up [against] some other innovations.”
“While that’s all interesting, it reminds me a lot about when peer-to-peer lending came along about 15 years ago.”
As per Gensler, it took regulators around 3 to 5 years to bring P2P systems within investor protections, and this is the process he is now witnessing in DeFi.
“There’s a lot of lending going on. There’s a lot of trading going on. And without protection, I fear that it’s going to end poorly.”
One major segment of DeFi includes stablecoin, the digital asset whose value is pegged 1:1 to fiat currencies like the USD or the Euro. When questioned whether stablecoins should be regulated in the same way as banks, the SEC chair mentioned that this is something the Securities and Exchange Commission is looking at.
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