Decentralized finance (DeFi) has gained tremendous popularity over the past several months. Many crucial industry players have acknowledged the potential of the space. It seems like the subject of DeFi has now reached the quarters of SEC.
In a positive development for the ecosystem, the commissioner of the US Securities and Exchange Commission (SEC), Hester Peirce has called for proper regulation from the federal regulators surrounding the DeFi space.
During a speech at George Washington University Law School for Regulating the Digital Economy Conference, Peirce said that it is important to be mindful of the potential upsides and downsides of the space.
But most importantly, she went on to stress the need to offer both legal clarity and the freedom to experiment to help DeFi compete with its centralized finance (CeFi) counterpart to provide investors financial services.
It is no secret that DeFi applications are on the verge of challenging traditional finance players on various fronts. And the regulators seem to have realized this.
The exec said that DeFi is likely to provide “a very good test” for the watchdogs to regulate with an eye toward protecting the interests of investors and markets, not incumbents. According to a published version of the speech, Peirce reportedly stated,
“The anti-Wall Street sentiments coursing through the market events of recent weeks and the growing realization of the power that private and public centralized entities wield in our lives have inspired some to call for throwing the legacy financial system out entirely.”
DeFi might finally be getting the recognition that the industry players seek. It is one of the massive growth spaces in the cryptocurrency realm with significant capital involved.
The latest remark by an esteemed executive such as Peirce, is crucial for the decentralized industry, especially at a point when there has been an influx of institutional money.
Peirce’s words in support of DeFi added legitimacy to a space that has been, more often than not, dismissed as a fad or scam.
Further instilling hopes on the burgeoning DeFi landscape, the Commissioner also noted,
“Although a work in progress with all the growing pains and rough edges that implies, DeFi’s promises of democratization, open access, transparency, predictability, and systemic resilience are alluring”
Decentralized finance is evolving and with it the concept of financial systems. Many analysts had previously noted the space is likely to not only have a significant impact on how traditional financial establishments operate in the future but could also bring about a shift in the structure of the whole financial system at a macroeconomic level.
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