The Federal Reserve (FED) chairman, Jerome Powell recently spoke out about the significance of DeFi technology and it’s impact, arguing that the U.S needs to quickly make clearer regulations for DeFi and crypto.
Decentralised Finance’s (DeFi) Current Issues
On Tuesday, during a panel discussion in an event titled “Opportunities and challenges of the tokenisation of finance” hosted by the Banque of France, Powell made some statements on Decentralized Finance on the significant structural issues it has, specifically in terms of transparency.
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“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.” Powell said.
“Within the defi ecosystem, there are these very significant structural issues around transparency — lack of transparency.“
Push For Better Regulations For DeFi
Powell also expressed that it’s a good thing that the DeFi ecosystem don’t have a large interaction with the traditional banking system & traditional finance system so far, saying “It didn’t have significant effects on the banking system and broader financial stability.“
“That’s a good thing. I think it demonstrates the weaknesses and work that needs to be done around regulation carefully and thoughtfully, and gives us a little bit of time.” Powell said.
However, the FED chairman also expressed that this situation will not persist, arguing that the U.S needs to have more regulations in order to be careful so that DeFi won’t affect TradFi for the most part.
“Ultimately that’s not a stable equilibrium and we need to be very careful about … how crypto activities are taken within the regulatory perimeter.”
He continued, “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.“
These comments made by the FED chair suggests that he does indeed see DeFi growing by a lot in the near future despite the markets current turmoil.