Commodity Futures Trading Commission (CFTC) Commissioner, Summer K. Mersinger, has expressed concerns over the CFTC’s approach to decentralized finance (DeFi) protocols. In a public statement issued on September 7, Commissioner Mersinger criticized the focus on enforcement actions rather than engaging with the public on DeFi matters.
Mersinger argued that enforcement actions may not be the most appropriate way to address the novel technology of DeFi. Instead, he believes the CFTC should prioritize engagement with the public and stakeholders through rulemaking and other regulatory tools.
Mersinger stated, “I am concerned that the Commission in these cases is taking another step down the path of bringing enforcement actions when we should be engaging with the public.”
While Mersinger remains open to applying existing regulations to innovative situations when necessary to protect market participants, he raised questions about the regulatory jurisdiction over DeFi protocols, the need for clear rules, and the potential consequences of enforcement actions without transparent rulemaking. Notably, the CFTC’s Spring 2023 regulatory agenda does not include any rulemaking activities related to DeFi, leaving these issues largely unaddressed.
The CFTC recently announced regulatory action against three DeFi protocols, including Opyn Inc., ZeroEx Inc., and Deridex Inc., alleging failures to register various derivatives trading offerings and non-compliance with customer provisions outlined in the Bank Secrecy Act.
Mersinger’s concerns highlight the ongoing debate surrounding the regulation of DeFi, with regulators grappling to find an appropriate balance between innovation and investor protection.