DeFi tokens surged in value when former SEC Chairman Paul Atkins recently said these things. He thanked the dedication of the SEC’s Division of Corporation Finance staff for their hard work. Second, the staff addressed the question of consumer participation in voluntary proof of work or proof of stake networks. They indicated that this nature of engagement is outside the scope of federal securities law. Industry stakeholders have largely welcomed this clarity, which could free up capital that was otherwise stifled by regulatory confusion.
The SEC’s Division of Corporation Finance staff offered their perspective on the matter of voluntary participation in proof-of-work or proof-of-stake networks. Their legal opinion pointed to the fact that these kinds of activities are outside of the scope and jurisdiction of federal securities law. This clarification is widely considered a step in the right direction toward encouraging further innovation in this emerging area of DeFi.
For Ian Unsworth, cofounder of crypto research firm Kairos, Atkins’ comments offer the type of clarity that the industry so desperately needs. He’s one of those who believes this is a watershed moment for decentralized finance.
"DeFi has long been a coiled spring, burdened by a lack of regulatory clarity. With the pro-innovation stance the SEC has now taken, this signals a 180-degree pivot from the Gensler regime." - Ian Unsworth
With this simplicity, Unsworth said the industry can start to move capital that’s been left on the sidelines into decentralized finance protocols. He further stressed the desire of allocations to get the best exposure possible to the space.
"The market reaction showed how eager allocations are to make sure they’re optimally exposed to this sector.” - Ian Unsworth
Fellow cofounder and Alluvial chief product officer Matt Leisinger found the SEC’s recognition of promising. He stressed the need to make things less confusing for network users.
"While formal rulemaking is still needed, this guidance meaningfully reduces ambiguity for network participants and partners, and opens the door for a regulatory structure that enables innovation and protects investors." - Matt Leisinger
In the aftermath of these announcements, a number of DeFi tokens have experienced five-, six-, and even seven-figure percentage increases. Uniswap, one of the largest decentralized exchanges, for instance, has spiked about 26% in the past 24 hours.
At time of writing, Uniswap price is hovering around the $8.20 support area. The asset has a circulating market capitalization of $4.9 billion.
Aave has been on a huge runup, up almost 20% in the past 24 hours. Aave is trading at about $310, reaching a four-month high.
The enthusiastic market response illustrates how much the industry has been looking forward to more defined regulatory parameters. The SEC’s unreasonable and transparent overreach is seen as a watershed moment, inspiring even more innovation and investment to the DeFi revolution.
