{"id":316532,"date":"2021-08-06T05:50:02","date_gmt":"2021-08-06T02:50:02","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/crypto-mom-true-decentralization-is-the-only-thing-that-will-save-defi-projects\/"},"modified":"2021-08-06T05:50:02","modified_gmt":"2021-08-06T02:50:02","slug":"crypto-mom-true-decentralization-is-the-only-thing-that-will-save-defi-projects","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/crypto-mom-true-decentralization-is-the-only-thing-that-will-save-defi-projects\/","title":{"rendered":"# Crypto Mom: True decentralization is the only thing that will save DeFi projects"},"content":{"rendered":"

“# Crypto Mom: True decentralization is the only thing that will save DeFi projects <\/strong>”
\n<\/p>\n

Hester Pierce of the U.S. Securities and Exchange Commission \u2014 colloquially known as ‘Crypto Mom,’ has warned of rampant \u201cshadow-centralization\u201d within the decentralized finance (DeFi) sector.<\/p>\n

Speaking to outspoken DeFiWatch founder Chris Blec in an August 4 discussion streamed<\/a> by The Defiant, the SEC commissioner noted that decentralized organizations and DeFi are new concepts for regulators and that: \u201chaving a peer-to-peer system that doesn\u2019t have central intermedia<\/a>ries is very different from what we\u2019re normally dealing with.\u201d<\/p>\n

\u201cIf you want to be decentralized, you really need to be decentralized, and that is going to then put you in a different category from the perspective of regulators because that\u2019s just not something that we\u2019ve dealt with before.\u201d<\/p><\/blockquote>\n

\u201cIf regulators can find a centralized part or group of people that they can grab hold of, they will grab hold of them. So I think it\u2019s just good to be cautious about how you build things because, down the road, it could have regulatory implications,\u201d she added.<\/p>\n

Blec asked for Pierce\u2019s opinion on the best route for developing decentralized protocols, asking if founders should strive to reach the same level of decentralization as Bitcoin, or start to build \u201creally cautiously and then running towards regulation\u201d to avoid running afoul of the law.<\/p>\n

The commissioner said that existing regulations have been designed so that \u201cany entity or person that is involved in the financial industry is probably going to come under at least one regulatory framework.\u201d <\/p>\n

Pierce urged DeFi founders who believe they are engaged in new activities that do not fall under the framework of existing legislation to engage regulators and \u201cfigure out if there\u2019s an alternative way […] to comply.\u201d<\/p>\n

\u201cIf you want to make a case that you\u2019re something different than the CeFi or TradFi system, then you have to show that you\u2019re doing something radically different, which from my perspective, requires decentralization.\u201d<\/p><\/blockquote>\n

\u201cIf the trust is really coming from the code, that\u2019s something very different than if the trust is coming from one company or a group of people,\u201d she added.<\/p>\n

The commissioner also noted the prevalence of \u201cshadow-centralization\u201d within the DeFi sector, where opaque governance structures can lead to a protocol being subject to centralized control despite wearing the banner of decentralization in its marketing.<\/p>\n

Related: <\/em><\/strong>SEC has no authority over crypto, CFTC commissioner argues<\/em><\/strong><\/p>\n

However, Pierce urged regulators to adapt to decentralized innovation, stating: \u201cregulators need to do a better job of figuring out how to work with innovators.\u201d<\/p>\n

\u201cThat\u2019s part of the reason our financial system is so concentrated,\u201d she continued. \u201cBecause the only people who can afford to wait to get the app<\/a>rovals are people who have a lot of money already and who can have really good lawyers already.\u201d<\/p>\n

On the question of what Satoshi Nakamoto\u2019s experience would look like should they have engaged the SEC before launching Bitcoin, Pierce stated: <\/p>\n

\u201cIt\u2019s 2021, it would be very likely that Satoshi would still be […] trying to get a no-action letter.\u201d<\/p><\/blockquote>\n