SEC’s Hester Peirce Says ‘Alluring’ DeFi Space Needs Legal Clarity
U.S. Securities and Exchange Commission Commissioner Hester Peirce said regulators need to provide “legal clarity and freedom to experiment” to allow decentralized finance (DeFi) to compete with the traditional financial system.
In a speech Monday for the George Washington University Law School “Regulating the Digital Economy” conference, Peirce described DeFi as “a very good test” for regulators to regulate in such a way that it empowers investors and markets.
Peirce made reference to “anti-Wall Street sentiment” evidenced in events such as the GameStop trading frenzy, which, she said, have “inspired some to call for throwing the legacy financial system out entirely” and replace it with DeFi.
Amid suspicions that financial markets are not working for everyone, DeFi is “building an alternative to the legacy centralized financial system (CeFi)” with smart contracts replacing intermediaries, according to Peirce.
Peirce concluded that DeFi would be a challenge for regulators but would also provide new tools to meet that challenge, saying, “The regulator’s job is unchanged even though the stage is set with more modern scenery.”
See also: SEC Commissioner Peirce Says Market Is Ready for a Bitcoin ETP
