Last week, former Chair of the Commodities and Futures Trading Commission (CFTC) Timothy Massad argued that despite DeFi enthusiasts claiming they replace traditional intermediaries, they provide an incomplete service. He was participating in an OMFIF panel discussing cryptocurrency regulation alongside SEC Commissioner Hester Peirce. Also debated was what a crypto regulatory framework might cover, where the current gaps exist, and whether or not there’s a need for a new crypto regulator.
Talking about DeFi, Massad stated, “It’s like me saying I can build a car that can get much better gas mileage than anything Ford or GM can produce because I’m not going to put brakes in. Obviously, that doesn’t work.” He was emphasizing the need for the same risk, same rules approach, and centralized entities currently perform KYC, investor disclosure, reporting and other protections.
At a big picture level, Massad agreed with Peirce that it’s much better to regulate through rules rather than enforcement and also agreed it would be better for the SEC and CFTC to work together to arrive at common standards. However, he said that many DeFi companies misunderstand the regulator’s responsibilities.
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