The United States Commodity Futures Trading Commission (CFTC), the body that regulates the U.S. derivatives markets, has released a report outlining its recommendations for mitigating risks associated with decentralized finance (DeFi). The report was compiled by the CFTC’s Digital Assets and Blockchain Technology Subcommittee.
While the report acknowledges the “promising opportunities” presented by DeFi, it also highlights the complex and significant risks it poses to the U.S. financial system, consumers, and national security. The CFTC has proposed several strategies to mitigate these risks, including enhancing technical capacities and understanding of DeFi, surveying the existing regulatory landscape, identifying risks and vulnerabilities, and evaluating potential policy responses.
The report further emphasizes the need for policymakers to determine the most suitable target and form of regulatory intervention. The CFTC advises that in identifying targets for regulatory intervention, policymakers should consider where the intervention is likely to impose the lowest costs and generate the fewest unintended consequences, in order to balance costs and benefits.
The derivatives regulator also underscored the importance of fostering engagement and collaboration with DeFi builders, regulatory efforts, and international standard setters. This is seen as a crucial step in managing the risks associated with DeFi.
On a related note, Commissioner Christy Goldsmith Romero recently expressed the need to study digital asset-related issues to avoid harmful unintended consequences. Romero stated, “From the time that I arrived at the CFTC, I have played a steady drumbeat that we need to study emerging issues related to digital assets or we could risk harmful unintended consequences.” She added that she hopes the report can serve as a starting point for a conversation between policymakers and industry participants, as DeFi continues to be at the center of illicit finance risks, cyber hacks, and theft.
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| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | Christy Goldsmith Romero |
| Companies | Digital Assets and Blockchain Technology Subcommittee, United States Commodity Futures Trading Commission |
| Currencies | None |
| Securities | None |
