DeFi has gained significant traction this bull season. It’s not only attracted a myriad of previously skeptic market players to rake in profits but has now come under the scrutiny of law enforcement bureaus. In the latest development, the Commissioner of Commodity Futures Trading Commission [CFTC], Dan M. Berkovitz has called for a crackdown on unregulated derivatives platforms in the decentralized finance globe.
CFTC exec only termed DeFi”illegal”
Berkovitz considers DeFi derivatives platforms may violate the present Commodity Exchange Act [CEA]. In a keynote speech , the commissioner was quoted stating,
“There is no intermediary to monitor markets for fraud and manipulation, prevent money laundering, safeguard deposited funds, ensure counterparty performance, or make customers whole when processes fail. A system without intermediaries is a Hobbesian marketplace with each person looking out for themselves. Caveat emptor–“let the buyer beware.”
He also opined that “unlicensed” DeFi markets for derivative instruments are a bad idea and that he does not see how it is legal under the act which requires futures contracts to be traded on a designated contract market [DCM] that are licensed and regulated by the CFTC.
Berkovitz went on to speculate that it is”untenable” to permit”an unregulated, unlicensed derivatives market” to function adjacent to, what he considers,”a fully controlled and accredited derivatives” market.
Acknowledging the lack of”protects’ in the market as well as customer protections, the commissioner said that it would not be fair to enforce the obligations, restrictions, and costs of regulation upon some DeFi while allowing their unregulated rivals to exist wholly free of such obligations, restrictions, and costs.
He said that DeFi should not be allowed to transform into”an unregulated shadow financial” marketplace in a direct match with its controlled counterparts. He also urged that the CFTC along with other labs of the country, need to concentrate more on the rising concern and address regulatory transgressions appr