[NEWS] US CFTC releases report on DeFi to promote dialogue between policymakers and industry

The Digital Assets and Blockchain Technology Subcommittee of the CFTC (Commodity Futures Trading Commission) Technology Advisory Committee released a comprehensive report on DeFi (decentralized finance) on the 8th.

The report aims to inform ongoing policy discussions in the U.S. Congress, state legislatures, the CFTC, and other regulatory agencies, and promotes understanding of the fundamentals of DeFi.

CFTC Commissioner Christy Goldsmith Romero noted that "DeFi's benefits and risks depend heavily on the design of a particular DeFi system and how it functions." "DeFi has always been a breeding ground for illegal financial risks, cyber hacking, and theft. We hope this report will be a first step in facilitating dialogue between policymakers and the industry," she said.

Last April, the U.S. Treasury Department reported on the risks of illegal finance in DeFi. Federal regulators have recommended that the industry explain how relevant laws and regulations apply to DeFi services and take additional regulatory measures and publish guidance. The CFTC's report reflects that effort.

The report pointed out that concerns about DeFi include the lack of boundaries of responsibility and accountability, and that some designs avoid them. Given the potential risks, governments and the industry need to work together to better understand DeFi and to take regulatory and other strategic initiatives.

The report also listed the following items for investor protection, consumer protection, market integrity, and financial stability:

1. "Assessment of resources, data collection, and mapping"
2. "Examine existing regulatory boundaries"
3. "Identify, evaluate, and prioritize risks"
4. "Identify the scope of potential policy responses to address risks"
5. "Strengthen engagement and collaboration with domestic and international standard setters, regulatory efforts, and DeFi system builders"

The report went on to say that given the current situation in which DeFi has been misused for money laundering and terrorist financing, policymakers need to take a broad, holistic approach, recommending specific measures applicable to anti-money laundering and digital identity.

In addition, it also recommended imposing regulations on the discovery and verification of identity information across layers in the ecosystem. It said it was necessary to examine various types of ID information to determine which information should be made discoverable to whom, under what conditions and due process.

Reference:Announcement
Image: Shutterstock

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