News20 August 2021

SEC Chairman Calls for the Registration of DeFi Platforms

SEC Chairman, Gary Gensler. Photo: Sec.gov

Summary

  • Gary Gensler states that most DeFi platforms are centralized
  • Platforms are developed by incentivized "core groups of folks"

Gary Gensler, the SEC chair, has come out saying that most DeFi platforms are centralized and may need to register under SEC. According to Gary, most DeFi projects are centralized to some degree since a group of people creates them with the goal of promoting their platforms.

Speaking to the Wall Street Journal on 19 August, Gensler noted that the way the term DeFi is used to sell the decentralized idea is a misnomer. He says, "These platforms facilitate something that might be decentralized in some aspects but highly centralized in other aspects."

According to Gensler, even though decentralized finance projects are meant to be autonomous platforms without a centralized authority, most of them are created and controlled by incentivized teams meant to promote their platforms.

"There's still a core group of folks that are not only writing the software, like the open-source software, but they often have governance and fees," he said, "there's some incentive structure for those promoters and sponsors in the middle of this." He further suggested that such DeFi projects meet the criteria to be regulated, urging DeFi projects to consider registering under the SEC.

Kibet Elikana
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