DeFi projects are highly centralized and must be regulated, warns Gensler2 min read
The head of the US Securities and Exchange Commission (SEC), Gary Gensler, pointed out that although the current DeFi operate as decentralized financing projects, in some respects they have clear features of centralized management, which means they must be regulated accordingly.
Gary Gesnler, who has become the new head of the SEC this year, pointed out that DeFis are highly centralized in some respects and therefore urges their project authors to take appropriate steps to register with the SEC.
In an interview with the Wall Street Journal on August 19, Gensler literally pointed out that the concept of DeFi is incorrect, because the projects they are associated with are far from having the perfect characteristics of decentralization. “These platforms allow for something that can be decentralized in some aspects, but highly centralized in others.”“He said.
Although DeFi projects are designed as autonomous platforms that operate without centralized authority, Gensler points out that they are developed and controlled by a centralized team of developers who are motivated to promote them.
“There’s still a basic group of people who not only write software like open source software, but often have control over the fees – there’s just some structure in between for these promoters and sponsors.”
“These so-called decentralized financial platforms actually have a great deal of centralization. They are run by a group of entrepreneurs. So they should come out and register with us,” he repeated his statement a day later in an interview on a similar topic for Fox Business.
Gensler is not the only SEC member to feel that DeFi is far from being as decentralized as its name implies. Hester Peirce, also known by the nickname “crypto mama”, has a similar opinion (because she tries to steer regulation in a direction that does not attract progress in the field of cryptocurrency, ed. Note).
Peirce had previously acknowledged the “shadow of centralization” over DeFi and therefore warned the creators of these projects in advance: “Regulators will find a centralized section or group of people they can seize and seize.”
“If you want to be decentralized, you have to be really decentralized, and that puts you in a different category from the regulators’ point of view, because that’s something we haven’t dealt with before.” indicated a possible way out of regulatory oversight.
Gensler and Peirce’s views on contemporary DeFi are not entirely misguided. Even cryptocurrency experts point out that most defi projects do have some type of “leadership” that has the ability to decide the fate of a given platform.