The decentralized architecture will not save protocols from oversight, Gary Gensler, the Chairman of the US Securities and Exchange Commission (SEC), told The Wall Street Journal in an interview. Particularly, Gensler addresses those who control the governance of a token and fees within a smart contract.
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“There is still a core group of folks that are not only writing the software, like the open-source software, but they often have governance and fees. There is some incentive structure for those promoters and sponsors in the middle of this," he said.
This is the second time Gensler aims at the DeFi market over the past few months. Earlier this month, he said the regulator is looking at different crypto issues, including initial coin offerings, lending platforms and decentralized finance (DeFi). SEC Chair believes that regulating cryptocurrency exchanges is the easiest way to get a quick handle on crypto trading.
Nonetheless, he is concerned that people will find new ways of getting into crypto, including peer-to-peer (p2p) lending on DeFi platforms. He also warned these loans could be under SEC oversight if firms are advertising a specific interest-rate return on a crypto asset.
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