The Lack of Transparency and Pseudonymity is a Hurdle in DeFi, SEC Says

The Lack of Transparency and Pseudonymity is a Hurdle in DeFi

U.S. SEC’s Caroline Crenshaw says DeFi has significant opportunities but presents regulatory risks and challenges to the investors and financial markets.

Crenshaw says that while DeFi attracts attention with the potential for lucrative gains, there is confusion around the regulatory framework.

The SEC official views DeFi’s scalability, efficiency, high transaction speeds, and low costs as impressive but maintains that investors need a level-playing field.  

Crenshaw says investing is the major aspect of Decentralized Finance, where users can transfer digital assets faster and easily. She thinks that the lack of transparency and pseudonymity were the two major structural hurdles facing the sector.

The commissioner says that all the aspects of DeFi involving securities were under the SEC’s jurisdiction, but the relevant participants were yet to register with them. Crenshaw says there was an enforcement plan in place against non-compliance in any of the aspects.

She urges DeFi developers to clarify any regulatory issue with the commission’s Strategic Hub for Innovation and Financial Technology. Crenshaw says that the commission’s role was to ensure that all investors in the DeFi space had equal access to the important information.

Source: U.S. Securities and Exchange Commission

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