Gary Gensler Says DeFi Platforms Are ‘Highly Centralized’

Spotlight

  • Gary Gensler said that decentralized finance (DeFi) is highly centralized in many ways.
  • At the beginning of this month, Hester Peirce, the SEC Commissioner who is also known as “Crypto Mom” echoed similar sentiments on the other side when she warned about “shadow-centralization” in the DeFi space.
  • On the 3rd of August, it was reported that Gary Gensler identified a number of crypto policy changes that are under close scrutiny by the SEC.

Gary Gensler On DeFi Platforms

Gary Gensler is the chairman of the US Securities and Exchange Commission. He said that decentralized finance (DeFi) is highly centralized in many ways. Gary encourages projects that are working in this area to register with the SEC. On Thursday Gary spoke to The Wall Street Journal. Gensler considered the decentralization concepts behind the term DeFi are “a bit of a misnomer”. He further said:

“These platforms facilitate something that might be decentralized in some aspects but highly centralized in other aspects.”

DeFi projects are specifically designed as standalone platforms. They operate without the need for a centralized governing body. But, Gensler argues that many projects are developed and monitored by a motivated focus group to promote their platform. He continued, “There’s still a core group of folks that are not only writing the software, like the open-source software, but they often have governance and fees. There’s some incentive structure for those promoters and sponsors in the middle of this”.

Gary Gensler had an interview on Friday with Fox Business. In that interview, he suggested in his comments that several DeFi projects are centralized enough to be subject to regulation. He urges DeFi projects to register with the SEC says:

“These so-called decentralized finance platforms actually have a lot of centralization. There’s a group of entrepreneurs that are running these platforms. They should come in and to that extent work with us and get registered.”

Hester Peirce Shares Similar Ideas

At the beginning of this month, Hester Peirce, the SEC Commissioner who is also known as “Crypto Mom” echoed similar sentiments on the other side when she warned about “shadow-centralization” in the DeFi space. Peirce states that“if regulators can find a centralized part or group of people that they can grab hold of, they will grab hold of them,” and urged people to be cautious when they start building DeFi projects from the ground.

She further said, “If you want to be decentralized, you really need to be decentralized, and that is going to then put you in a different category from the perspective of regulators because that’s just not something that we’ve dealt with before”.

On the 3rd of August, it was reported that Gary Gensler identified a number of crypto policy changes that are under close scrutiny by the SEC. It also includes concerns related to DeFi, lending platforms, token offerings, stablecoins, exchange-traded funds, and custody.

Visit our website to get daily news and updates on cryptocurrency mining, DeFi, NFTs and more.

Related Articals