CFTC Shifts Attention to DeFi Market in Effort to Tackle Potential Risks
The decentralized finance (DeFi) market is set to become the focus for the U.S. Commodity Futures Trading Commission (CFTC), according to a recent announcement. On January 8, the CFTC’s Committee of Advisors called for the regulatory body and the government to prioritize understanding the workings of the DeFi market. In order to achieve this, the committee has urged commissioners to produce a report that will provide valuable insights into the state of DeFi.
The report emphasizes that the benefits and risks associated with DeFi largely depend on the specific design and features of individual systems. One of the main challenges with DeFi systems is the lack of clear lines of responsibility and accountability, which should be avoided in certain industry projects.
This forthcoming publication will mark the first report on the decentralized finance market from a government advisory committee.
In a related development, CFTC Chairman Rostin Behnam stated in December 2023 that the majority of digital assets can be classified as commodities. He also acknowledged an ongoing dispute with the U.S. Securities and Exchange Commission (SEC) over the jurisdiction to regulate the cryptocurrency industry.
Behnam highlighted that the turf war between regulators is a significant hurdle in effectively regulating cryptocurrencies in the United States, particularly between the SEC and the CFTC. These agencies have been unable to reach an agreement on which entity should oversee the cryptocurrency sector.
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