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24 March 2023
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SEC: “DeFi is more centralized than you think and needs to be regulated”

Gary Gensler , head of the US Security Exchange Commission (SEC) , said that many of the decentralized finance platforms (DeFi) are actually highly centralized and therefore need to be regulated and registered.

In an interview with the Wall Street Journal , Gensler explained that DeFi projects are not immune to regulation because

“These platforms facilitate something that could be decentralized in some respects but highly centralized in others.”

The SEC wants to regulate DeFi

The problem, according to Gensler, is that often the developers of these platforms do not stop only to write the code but have to do with the governance and the fees that regulate advertising incentives.

“There is still a group of people who are not only writing software, such as open-source software, but often have governance and commissions. There is a certain incentive structure for those promoters and sponsors in the middle of it all. “

On this issue Gensler was also interviewed by Fox Business today explaining that regulation of DeFi projects is necessary.

“These so-called decentralized finance platforms actually have a lot of centralization. There is a group of entrepreneurs who are running these platforms. They should enter and in this sense work with us and register ”.

Is DeFi Really Decentralized?

According to ConsenSys, the blockchain software company founded by Joseph Lubin , some projects are really decentralized, such as in the case of Maker (MKR) or the decentralized exchange Uniswap , but other projects that call themselves DeFi often have a high centralized share. .

“Some have great control over their direction, others are governed by venture capitalists, and others have larger communities that vote for change as an open source project.”

This had in fact declared some time ago Lex Sokolin , CMO and Global Fintech Co-Head of Consensys to CryptoNews.com.

It is not for nothing that the Defiscore.io website exists which provides a score in terms of centralization and risks of a project. Maybe this tool will become the basis for the SEC’s study of regulation.

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