CFTC Chair Behnam Advocates Proactive Oversight of DeFi

Chair of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, emphasized the urgency to regulate decentralized finance (DeFi) in his address on Monday, likening the situation to dealing with “unlicensed physicians.”

Speaking at the Futures Industry Association Expo in Chicago, Behnam’s comments follow roughly a month after the agency confirmed settling charges with DeFi platforms Opyn, ZeroEx, and Deridex due to registration infringements.

Behnam conveyed, “To suggest that … we must wait until victims suffer and cry out for help to be proactive and ensure that critical market oversight, robust cybersecurity and system safeguards, and customer protections are in place undermines our mission and purpose.” Drawing parallels, he added, “If you require an analogy, think about whether you would be comfortable on the road if only some individuals were required to have a drivers’ license, or whether, given the choice, you would entrust your healthcare to an untrained, or unlicensed physician.”

The agency’s recent actions towards DeFi have come under scrutiny, especially its decisions against the trio of DeFi platforms. Last month, Coinbase CEO Brian Armstrong advised the affected protocols to challenge the cases legally, arguing that the CFTC “should not be creating enforcement actions against decentralized (DeFi) protocols.”

On the topic of DeFi, the CFTC’s Enforcement Director, Ian McGinley, recently described unregulated DeFi exchanges as “an obvious threat.”

Ian McGinley elaborated in a September speech at a Practising Law Institute conference: “The existence of unregulated DeFi exchanges is an obvious threat to the markets regulated and customers protected by the CFTC, and it is one we have taken very seriously.”