Hester Pierce, United States Securities Markets Commission, known colloquially as “crypto mom”, has warned against “rampant centralization in the shadows” in the decentralized financial sector (DeFi).
Speaking to DeFiWatch founder Chris Blec in a discussion broadcast by The Defiant on Aug. 4, the SEC commissioner found that decentralized organizations and DeFi are new concepts for regulators and that: “Having a peer-to-peer system without central intermediaries is very different from what we normally do.”.
â ???? If you want to be decentralized, you really have to be, and that will put you in a different category from the point of view of regulators because we haven’t looked at that yet.
“If regulators can find a centralized party or group of people to catch, they will. So i guess It is good to be careful how things are built as this could have regulatory implications in the future“, he added.
Blec asked Pierce the best way to develop decentralized protocols, asked if the founders should seek the same level of decentralization as Bitcoin or start building “very carefully and then rush to regulation” so as not to run into conflict with the law.
That’s what the inspector said the existing rules have been designed so that “any entity or person working in the financial industry is likely to be subject to at least one regulatory framework”.
Pierce challenged the founders of DeFi. on who believe that they are engaged in new activities that are outside the scope of current legislation to contact the regulators and find out if there is an alternative route […] obey the law “.
â ???? If you want to argue that you are something other than the CeFi or TradFi system, you have to show that you are doing something radically different which, in my view, requires decentralization.â ????
“When the trust really comes from code, it’s very different from when the trust comes from a company or a group of people.”, he added.
The Commissioner also noted the prevalence of “centralization in the shadows” within the DeFi sector.where opaque governance structures can result in a protocol being subject to centralized control even though it carries the banner of decentralization when it is commercialized.
But still, Pierce urged regulators to adapt to decentralized innovationwhich says, “Regulators need to better figure out how to work with innovators.”
“That’s one of the reasons our financial system is so concentrated,” he continued. “Why The only people who can afford to wait for permits are people who already have a lot of money and may already have very good lawyers. “.
When asked what Satoshi Nakamoto’s experience would be if he had shut down the SEC before Bitcoin was launched, Pierce said:
â € œIt is 2021, it would be very likely that Satoshi was still […] try to get a letter of nullity.â ????