A commissioner of the Commodity Futures Trading Commission is calling for a crackdown on decentralized finance (DeFi) platforms.
In a recent speech titled “Climate Change and Decentralized Finance: New Challenges for the CFTC” Commissioner Dan Berkovitz referenced his concerns regarding the DeFi boom.
“Given the explosive growth of this sector, federal regulators should become familiar with this new technology and its potential uses and be prepared to protect the public against misuse.”
“Not only do I think that unlicensed DeFi markets for derivative instruments are a bad idea, I also do not see how they are legal under the CEA.”
Decentralized finance is an umbrella term that refers to several financial activities, such as borrowing and lending money. However, unlike traditional finance, DeFi platforms allow participants to make peer-to-peer transactions by using blockchain technology, bypassing legacy financial intermediaries such as banks and brokerages. By using smart contracts instead of central financial intermediaries, DeFi also allows users