DeFi Not Immune to SEC Oversight, Gensler Says: Report

DeFi projects that reward participants with incentives or digital tokens could be subject to SEC regulation, the SEC chairman said.

Aug 19, 2021 at 10:41 a.m. UTC

Updated Sep 14, 2021 at 1:42 p.m. UTC

9261423417_a92184e1d0_b — SEC Chairman Gary Gensler

U.S. Securities and Exchange Commission Chairman Gary Gensler warned that decentralized finance (DeFi) projects aren't immune to oversight by the markets' regulator.

DeFi projects have features that make them look like the type of entities regulated by the SEC, Gensler said in an interview Wednesday with the Wall Street Journal.
Even though they are decentralized, with no central entity in charge, DeFi projects that reward participants with incentives or digital tokens could enter territory that is subject to SEC regulation, he said.
“There’s still a core group of folks that are not only writing the software, like the open-source software, but they often have governance and fees,” Gensler said. “There’s some incentive structure for those promoters and sponsors in the middle of this.”

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