CFTC advisory committee advances recommendations urging a timely focus on DeFi

An advisory committee to the Commodity Futures Trading Commission voted Monday to submit a report to the commission calling on the government and industry to work to understand decentralized finance and “promote its responsible and compliant development” .

The CFTC’s Technology Advisory Committee voted at a meeting to make recommendations, which some say is the first substantive report on DeFi by a government advisory committee.

CFTC Commissioner Christy Goldsmith Romero, who sponsors the commission, said the report is intended to “to help inform ongoing policy debates in the U.S. Congress, state legislatures and regulators, including the CFTC,” the commissioner said in a statement.

The report includes recommendations for policymakers such as increasing knowledge around DeFi, improving the “timeliness and effectiveness of enforcement,” as well as assessing existing federal and state regulatory frameworks for DeFi and finding where regulations need to be expanded to address the risks.

“While policymakers around the world have built regulatory frameworks for crypto assets in recent years, the focus has been almost exclusively on the context of centralized exchanges with regulators seeking information from isolated intermediaries, in the same way that information flowed from banks to their regulators. Today,” said Ari Redbord, head of legal and government affairs for TRM Labs. Redbord also serves as vice chair of the CFTC’s Technology Advisory Committee.

Government officials around the world have been weighing in on how DeFi should be regulated. In December, the International Organization of Securities Commissions, a global standard setter for securities regulators, made nine recommendations in December on disclosures and cross-border cooperation. Lawmakers in the US have been working on bills to regulate other parts of the crypto industry, namely stablecoins, although DeFi has not been a major part of the discussions.

A first

Justin Slaughter, director of policy at Paradigm and a member of the CFTC Technology Advisory Committee, called the report “it.”The first major report on DeFi by a government advisory committee and is perhaps the most comprehensive assessment of DeFi by any US government agency to date.

Slaughter noted that the committee’s recommendations do not have the force of law, but said the report was a “major step forward for DeFi policymaking.”

“We have made the first attempt to explore the opportunities that DeFi promises and the risks it could bring,” says Slaughter wrote in a post on X after the meeting. “Policymakers can consider this as a first step on the map as they navigate DeFi policymaking.”