U.S. Securities Regulator Head Says Cryptocurrency DeFi May Become Subject to Regulation

▲Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC) [Image source=AP News]

[Asia Economy Reporter Kwon Jae-hee] The head of the U.S. securities authority indicated that decentralized finance services, known as DeFi, could become subject to regulation.

According to the Wall Street Journal (WSJ) on the 19th (local time), Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), said in an interview with WSJ that "DeFi is currently not fully regulated in the United States, but some forms have characteristics that could fall under the SEC's oversight."

For example, giving digital tokens or incentives to participants could be subject to regulation.

DeFi is an abbreviation for "decentralized finance," referring to providing various financial services through blockchain technology without control by central institutions such as governments or corporations.

DeFi developers argue that once software capable of automating transactions is created, it can operate without control thereafter, so there is no need for SEC oversight.

The WSJ explained that trading cryptocurrencies via DeFi has the advantage of not requiring users to entrust their cryptocurrencies to an exchange, as is the case when using cryptocurrency exchanges, thus eliminating the risk of cryptocurrency theft due to potential exchange hacks.

However, unlike exchanges, DeFi does not verify the identities of transaction participants, making it vulnerable to money laundering, the report added.

Chairman Gensler pointed out that the term "DeFi" is a "somewhat misleading label," stating, "These platforms can be decentralized in some aspects but facilitate something highly centralized in other aspects."

He also added that the regulatory approach to DeFi reminds him of past debates over P2P finance (online investment-linked finance) regulation.

This content was produced with the assistance of AI translation services.