The Securities and Exchange Commission (SEC) recently convened a roundtable discussion called “DeFi and the American Spirit.” While quite the contrarian take, this event does imply that the SEC will be more receptive to a regulatory DeFi innovation-friendly jurisdiction approach in the United States. The event highlighted the importance of aligning regulatory frameworks with core American values and fostering technological advancement within the DeFi space.
Commissioner Peirce and her special cryptocurrency task force convened the roundtable. The fact that commissioners Crenshaw and Uyeda both participated speaks to what this discussion means for the SEC to have right now. The conversations centered around how we can preserve American founding principles while the new age of internet accessibility and on-chain technology penetrates that very foundation.
SEC Chair Atkins last week made big hay out of the idea that DeFi aligned beautifully with some fundamental American ideals.
"Economic freedom, private property rights, and innovation are the core genes of the decentralized finance (DeFi) movement." - SEC Chair Atkins
Chair Atkins also addressed the important topic of limiting liability for creators of neutral tools. To explain just how similar it was, he compared it to the automotive industry.
"Just as developers of autonomous driving systems should not be held liable for third-party traffic violations or bank robberies, technology tool providers should not be held jointly liable for the misuse of on-chain tools by others." - SEC Chair Atkins
This foundational principle argues that technology tool providers should be immune from joint liability. They don’t solve for how others might misuse on-chain tools. This helpful statement supplies much-needed clarity and reassurance to developers, pointing toward a less antagonistic regulatory equilibrium.
The fireside chat, moderated by our own Mark Headd, dove into the promise of technological innovation to disrupt and improve upon current models of financial intermediation. Participants explored how regulatory frameworks established a century ago should not hinder technological innovations, particularly in the rapidly evolving DeFi landscape.
It touched on the prior administration’s hostile approach to cryptocurrency as well. Threats of litigation and regulation from earlier times had cast a shadow over staking service providers. Otherwise, they might be deemed to be illegally trading in securities.
The roundtable further explored an exemption mechanism designed to encourage developers, entrepreneurs, and relevant institutions to actively develop on-chain technology within the U.S. This new program furthers the Biden administration’s goal of establishing the U.S. as a place for innovative crypto assets.
"[making the U.S. a global hub for crypto assets]" - Donald Trump
The SEC's renewed focus on fostering innovation within the DeFi space comes amid growing interest and investment in the sector.
Recent publications from S&P Global Ratings have provided a comprehensive examination of both crypto and CeFi as well as DeFi. They highlight the increasing importance of understanding these new markets.
As we move further into a rapidly changing DeFi environment, one thing is clear. Investors and participants alike need to be on high alert. ChainCatcher would like to caution all readers to look at blockchain technology with a rational mind and skepticism about virtual token creation and speculation.
"We cannot refuse to move forward out of fear of the future." - SEC Chair Atkins
