Last week, the CFTC took action against operators of three DeFi platforms, Opyn, ZeroEx, and Deridex, for “offering illegal digital asset derivatives trading.” The agency’s enforcement director, Ian McGinley, had previously labeled unregulated DeFi exchanges as an “obvious threat” to regulated markets and customers. As a result of the charges, these protocols agreed to pay civil monetary penalties totaling $250,000, $200,000, and $100,000 respectively.
Armstrong questioned the validity of these charges and the applicability of the Commodity Exchange Act to DeFi protocols. He stated that these are not financial service businesses and suggested that the regulatory actions were pushing an important industry offshore. He encouraged DeFi protocols not to settle but instead to challenge these cases in court to establish a legal precedent.
The Coinbase CEO’s comments have sparked a debate within the crypto community. Some social media users agreed with Armstrong’s stance, while others questioned how a decentralized protocol could take something to court and whether many DeFi platforms are truly decentralized.
This is not the first time the CFTC has taken action against DeFi protocols. The agency has previously handled cases against Polymarket and Ooki DAO. Polymarket settled with the CFTC for $1.4 million, while the agency secured a victory in its case against Ooki DAO in June.
These cases demonstrate the CFTC’s commitment to enforcing existing regulations within the DeFi space, regardless of whether DeFi products are offered in a centralized or decentralized manner. However, Armstrong’s comments highlight the ongoing tension between regulators and the burgeoning DeFi industry.
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Source: Cryptocurrency - investing.com
