Today in a panel at a Bank for International Settlements (BIS) event, U.S. SEC Commissioner Hester Peirce, known as ‘crypto mum’, outlined some of the thorny issues around regulating decentralized finance (DeFi). She covered which areas would attract scrutiny from the SEC, the lack of a central counterparty to regulate, and her Safe Harbor proposal, which she plans to update.
She stated that many aspects of DeFi are outside the SEC’s purview, noting that a lot of what’s happening in DeFi is more about banking than securities, presumably because a significant amount of activity is around borrowing, lending, and to a lesser extent, insurance. Cryptocurrencies such as bitcoin and ether are classed as commodities which is the turf of the CFTC.
Peirce noted that if a protocol intended to mimic securities or related to asset management, it would be within the SEC’s purview. She added, “if you set up some sort of decentralized exchange (DEX) or automated market maker (AMM) that is trading securities among other things, then you have to think about what the implications are there.”
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