Cryptocurrencies may have many crypto fans but very few from the public sector and definitely not many from the US Security and Exchange Commission (SEC).
Hester Peirce is one of crypto’s only saviors from the SEC and has been quite vocal about her love for the nascent industry. In a speech rendered on Monday, Peirce spoke about another essential aspect of the crypto universe- DeFi.
“Crypto Mom” Calls For Clarity
SEC Commissioner Hester Maria Peirce has called on financial regulators in the US to provide “legal clarity and the freedom to experiment” for new crypto arrival (DeFi) to compete favorably against traditional centralized economic systems.
The speech titled “Atomic Trading” was given at a George Washington University Law School’s “Regulating the Digital Economy” conference. The remark meant to support upcoming crypto genre decentralized finance (DeFi for short) said regulators had a perfect test with Defi. Looking extensively into it will give regulators the needed guidelines to supervise better the digital economy to empower investors and the market.
DeFi, which came into the limelight in mid-2020 with a few million dollars to its name, has become a force to reckon with in 2021 with a market cap of over $35 billion. Hester says something must be done to protect it from the larger and more accepted centralized banking system.
The financial protocol built on the Ethereum blockchain provides peer-to-peer financial services for users leveraging decentralized ledger technology (DLT). Its unique bank-like services have seen investors jettison traditional banking services all because of its higher ROI.
Having a wide range of use cases for individuals, developers, and even institutions, the DeFi space is dubbed the next big thing in finance.
Hester has previously spoken on the challenges the SEC faced in properly managing the Defi space. According to a September remark, she noted that:
“It’s going to challenge the way we regulate. And it’s going to cause us to ask questions about what we think the role of a regulator is in DeFi – and I’m not sure that I’ve answered that for myself yet,” she said at the time.
But her latest set of remarks show she has made up her mind on the subject. Pointing to allegations by some that the financial markets were not favorable to the generality of investors, Hester said Defi was building an alternative to centralized financial systems (CeFi) with smart contracts suitably replacing intermediaries.
Hester also echoed Robinhood CEO Vlad Tenev’s sentiment on the need for real-time settlement in the stock market while appearing before the US Senate Congress. In a witness testimony published ahead of the hearing, Tenev and Citadel Securities founder Ken Griffin proposed reducing the time needed to settle disputes in the stock market.
Latching on these comments, Hester said blockchain technology could potentially change the way we do business globally. Blockchain’s faster transaction speed and lower costs were brought up as possible attractions.
Although not ruling out that DeFi can be a slice of tough meat to chew for regulators, Hester said the abundance of new tools would better help them meet the DeFi challenge.
Continued Legal Fog Is Keeping Big Money From Crypto
Cryptocurrencies have enjoyed widespread acceptance the world over, but as little as 5% of global financial institutions and corporate bodies are willing to come into the space due to the lack of a regulatory framework.
Companies that have taken the bull by the horn have had to face countless persecutions from the SEC. This has served as a deterrent for others to make a stake in crypto assets.
Even though the SEC has been mute so far concerning the rising call for regulatory goal posts, Biden nominee Gary Gensler’s probable confirmation is seen as a light at the end of the tunnel. The crypto enthusiast and instructor are believed to be better suited in navigating the US financial markets to global relevance in the digital economy.
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