Hester Peirce, U.S. Commissioner. The Securities and Exchange Commission, dubbed “Crypto Mom,” embraces the challenge of controlling decentralized finance.
In a speech at the George Washington University Law School event on the digital economy, Peirce said decentralized finance, or DeFi, may be the alternative legacy of the financial sector that many are pursuing, given the rise in anti-Wall Street sentiment around the short-term tightening of GameStop stocks. The SEC Commissioner said that the technologies will provide the regulator with a “very good test” to protect investors and markets.
“Although a work in progress with all the growing pains and rough edges that implies, DeFi’s promises of democratization, open access, transparency, predictability and systemic resilience are alluring,” said Peirce. “We regulators, mindful of the potential upsides and downsides, need to provide both legal clarity and the freedom to experiment so that DeFi can compete with CeFi to offer investors financial services.”
Peirce added that the SEC should look for ways to ensure the markets are inclusive, considering the anger that many have voiced since the 2008 financial crash, but most importantly about the GameStop trades. She said the Commission should be “more proactive in embracing technology” in order to make the economy work better for more people.
“The digital economy does pose some new regulatory challenges, but it also gives us new tools to meet those challenges. We should use those tools with genuine care for the freedom of the people we regulate.”
The Commissioner has repeatedly confirmed that DeFi has generated new problems for the SEC on a range of pending legal issues. While certain space ventures are likely to come under equity regulations, there are several DeFi offers made up of tokens that lack liquidity and are used to fund blockchain projects. She urged developers to talk with the SEC if the project “looks like the traditional security.”