In a trend that just keeps on gaining momentum, Federal Reserve Chairman Jerome Powell called for decentralized finance (DeFi) to be carefully regulated and said it has significant issues around transparency.
The statements were made at a recent roundtable conference organized by the Central Bank of France. It’s yet more evidence that the digital currency and blockchain industries are headed into a new regulated era where anonymity, crime, and a laissez-faire attitude to financial regulations will not be tolerated.
What did large financial players say at the roundtable?
Powell made the comments as part of a broader discussion involving European Central Bank (ECB) President Christine Lagarde, Bank of International Settlements (BIS) General Manager Agustin Carstens, and Monetary Authority of Singapore (MAS) Managing Director Ravi Menon. Each of these financial power brokers made remarks on DeFi.
Powell said regulators must “carefully and thoroughly” approach DeFi, adding that it has “very significant issues around lack of transparency.”
BIS boss Carstens said DeFi has “structural problems” and “intrinsic weaknesses,” but he does find some merit in its technology.
Powell highlighted how, while the current “crypto winter” is too small to impact the wider markets in any significant way, that won’t always be the case. So there is a “real need for more appropriate regulations” before it becomes too big to handle.
Reiterating what Dr. Craig Wright has been saying for years about digital currencies and blockchain technology, Powell said there should be a “same risk, same regulation” approach. Since many of the financial activities in DeFi closely resemble traditional financial activities, the same regulations that govern those should apply.
There’s no escaping legal compliance and regulations
Once again, we have confirmation of the message CoinGeek and Bitcoin SVers have been repeating for years: the same regulations that apply to traditional finance apply to digital currencies and assets. There’s simply no escaping the law, and the top players in the financial system have already figured all of this out.
Powell’s statements come just a week after the International Monetary Fund called for a globally coordinated approach to digital currency regulation. It’s clear and unavoidable evidence that the Wild West era of digital currencies is over. Going forward, only blockchains that embrace regulatory compliance and provide real utility will survive and thrive.
Blockchains like Monero, BCH, and BTC, explicitly designed to avoid regulatory compliance, will slowly fade to black as the new era of innovation, economic efficiency, and utility take hold.
Far from being a bad thing, this era should be welcomed. While anarchists hijacked Bitcoin in its early days and it has since been kneecapped by big-money interests who want to see it fail, the new regulatory environment repeatedly touted by Powell, Lagarde, Securities and Exchange Chairman Gary Gensler, and many other regulators across the world is a good thing. It will unlock Bitcoin’s true potential and usher in a world of micropayments, traceability, and economic efficiency never seen before.
Alongside new micropayment-fueled industries, applications like DeFi can continue to exist in this new world of transparency and economic freedom. They’ll just exist in a different form, and they’ll do so on scalable, legally compliant blockchains like Bitcoin SV.
Watch: The BSV Global Blockchain Convention panel, The Future of Financial Services on Blockchain: More Efficiency & Inclusion
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