Regulatory pressure continues to remain strong for cryptocurrency investors. This pressure will continue to grow over time. We have been discussing in which areas the pressure will increase for weeks. In light of recent statements, we can say that NFTs, exchanges, and DeFi are about to enter a challenging period.
Cryptocurrencies and Regulatory Pressure
In the past 1-2 months, there have been new statements from SEC and CFTC officials regarding cryptocurrencies. SEC has started filing lawsuits against NFT projects. Furthermore, the Chief of the Cyber Division of the regulatory agency (which is responsible for cryptocurrencies) stated that DeFi projects are also on their radar.
Now, the Chairman of the Commodity Futures Trading Commission (CFTC), Behnam, made similar statements. Behnam has a relatively moderate approach towards cryptocurrencies and does not exhibit an excessively negative attitude like Gensler. In his speech today, Rostin Behnam addressed the issue of DeFi.
CFTC’s Statement on DeFi
Behnam’s statements at the Futures Industry Association Conference in Chicago came after investigations into DeFi protocols Opyn, ZeroEx, and Deridex. DeFi is clearly an area that is being exploited, and it is a fact that regulators will not tolerate those who try to evade the law with the narrative of so-called “decentralization.”
Especially due to the exploitations and potential losses, DeFi protocols that resemble centralized crypto companies should also be subject to similar treatment. Behnam said the following;
“To suggest that we should wait for victims to suffer and cry out for help in order to be proactive and ensure market surveillance, robust cybersecurity and system protections, and customer protections are in place, undermines our mission and purpose. To make an analogy, think about whether you would feel comfortable on the road if only certain people had a driver’s license or if you had the choice to entrust your healthcare to an uneducated or unlicensed doctor.”
CFTC’s Executive Director Ian McGinley stated that the unregulated DeFi space is a clear threat. At some point, trust in the goodwill of governments is far from the narrative of crypto “not needing trust.” It also does not make sense for pools and protocol treasuries to be considered secure based on the possibility of not defrauding people by a few top names.
McGinley said the following last month;
“The existence of unregulated DeFi exchanges is a clear threat to markets regulated by the CFTC and protected customers, and we take it very seriously.”
