Regulators, who almost by definition are centralized, are beginning to wrestle with the rise in decentralized finance, Financial Times reports.
Decentralized is far more vast than the world of cryptocurrencies, and can include various types of accounts for saving and transmitting funds as well as exchanges and derivatives markets.
In an exclusive revelation, the Financial Times reported that fast-growing cryptocurrency players and other companies held video meetings last week with representatives of major regulators to bring them up to speed on developments in the decentralized finance space. Participants, according to the Financial Times, citing unidentified sources, included Uniswap, a centralized exchange, and dYdX, a trading platform for derivatives.
The marketing slogan of dYdX is “Leverage, decentralized,” and the company states that parties interested in trading contracts can get started with just a $10 account.
Currently dYdX uses the Discord platform popular among gamers and others for creating online discussion communities.
Uniswap states on its homepage: “The Uniswap protocol empowers developers, liquidity providers and traders to participate in a financial marketplace that is open and accessible to all.”
The company maintains it has enabled 54 million trades with a combined value of $289 billion.
On the regulator side of the calls, according to Financial Times, were representatives of the Commodities Futures Trading Commission and Securities and Exchange Commission.
According to Financial Times, the event was organized by the International Organization of Securities Commissions.
The paper noted: “Lawyers and cryptocurrency advocates said the rapid growth of DeFi in the past year had caught authorities off guard, while also raising unprecedented questions about the nature of financial regulation.”
“There’s so much happening so quickly that regulators just cannot respond, as a practical matter,” Lewis Cohen, a partner at crypto law firm DLx Law, reportedly told the paper.