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ARTICLE · 21 JUNE 2021

CFTC Commissioner Raises Regulatory Concerns Over Decentralized Finance

Hogan Lovells Cadwalader
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He also described how the CFTC can support the transition to a carbon-neutral economy and highlighted recent agency regulatory developments.

United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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At the FIA and SIFMA AMG Asset Management Derivatives Forum 2021, CFTC Commissioner Dan M. Berkovitz raised concerns regarding the legality of decentralized finance. He also described how the CFTC can support the transition to a carbon-neutral economy and highlighted recent agency regulatory developments.

Mr. Berkovitz asserted that unlicensed decentralized finance ("DeFi") derivatives markets are a "bad idea." He explained that the structure of a pure "peer-to-peer" DeFi system is intended to cut out financial intermediaries that are a source of strength to the U.S. financial markets because of the "critical financial services" they provide and the legal accountability imposed on them. He stated it would be "untenable" to allow DeFi - an unregulated, unlicensed derivatives market - to compete with a fully regulated and licensed derivatives market that is subject to the obligations, restrictions and costs of regulation.

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