Jerome Powell Sees “Real Need” For more Appropriate DeFi Regulation

Serious Structural issues cited.

Regulations again touched upon

The Chairman of the Federal Reserve, Jerome Powell spoke on decentralized finance during a panel this past Tuesday about digital finance which was hosted by Banque of France. In speaking he made the following statement about the defi ecosystem:

jerome powell

Jerome Powell states there must be real talks about regulation of crypto and decentralized finance 

“The monetary policy normalization that we’re seeing all over the world, all it did was simply reveal what we’ve long pointed out as significant structural issues in the defi ecosystem and conflict of interest.”

Crypto regulations is the name of the game lately as governments all over decide how best to handle the currency

Transparency is key 

Powell stated that there is a gross lack of transparency in the sector and stated that the silver lining he saw was that the interaction between the defi ecosystem , the traditional banking system, and traditional finance system at this point is not very large, stating that the “defi winter” didn’t have any significant effects on the banking system and broader financial stability.

Powell did state that this situation would not be a permanent one and that it is not a stable equilibrium, urging caution. 

He stated currently the defi ecosystem not damaging traditional banking and finance is good and that urgent discussions need to be had on how to properly regulate the ecosystem before there is an equilibrium between the two.

“In any case … there is a real need for more appropriate regulation so that, as defi expands and starts to touch more and more retail customers, appropriate regulation is in place.”

A common ground 

Regulation is not a new sentiment when it comes to crypto. Gary Gensler of the SEC has been adamant about regulating crypto and his team has gone as far as to declare crypto completely under the jurisdiction of the United States.

Many countries are beginning to form their own versions of what Crypto and DeFi regulations look like as more and more scams and attacks are happening in the space resulting in millions upon millions lost or stolen. Countries such as Australia have become examples of what regulations could look like in the future. England has even made it easier for the police to seize your crypto if they deem it necessary.

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