Sec chief calls Defi a “misnomer” and points to tighter regulation

Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), doubled down on his stance against decentralized financing rules (Defi). In a recent interview with The Wall Street Journal, Gensler called the term Defi “inaccurate” and spoke more generally about his position in the industry.

Since Gensler was confirmed by the U.S. Senate as Sec Chairman, the crypto industry has been waiting for the regulator to open up its approach to cryptocurrencies and blockchain technology. Gensler taught a cryptography class at MIT and appears to be adept at the industry.

However, his post had asked Congress to give him more authority to regulate cryptocurrencies and classify the sector as the “Wild West” of investment. In an interview, Gensler challenged the decentralized nature of Defi, underscoring the need for more oversight from the SEC and other U.S. regulators. The president said:

These platforms (Defis) facilitate things that are decentralized in some ways, but can be strongly centralized in other ways.

Moreover, Gensler referred to a project that” rewards participants with digital tokens, ” possibly referring to the resetting of management tokens implemented by certain Defi protocols. He believes these incentives and distributions can be overcome and “must be regulated”in terms of U.S. securities legislation. Gensler added:

There is still a large group of people who not only write software like open source software, but often have problems with management and cost. Central to this is an incentive structure for promoters and sponsors.

This could potentially affect Defi teams, referred to here as “promoters”and” sponsors.” As reported about a month ago, the threat of increased regulation has already affected the Defi sector.

As a result, uniswap labs and other teams have restricted access to certain tokens through their user interfaces. If Gensler’S SEC gets more authority, many teams could divest from U.S. operations

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