Can a DeFi Smart Contract Be Regulated? Two CFTC Commissioners Discuss - Ep.260

CFTC Commissioners Dan Berkovitz and Brian Quintenz discuss the difficulties of regulating crypto derivatives and DeFi. Show highlights:

their backgrounds

what the CFTC’s duties are regarding crypto

how the CFTC’s jurisdiction has evolved over the years

why Commissioner Quintenz believes SEC Commissioner Hester Peirce’s safe harbor proposal is “brilliant”

what relationship the CFTC and SEC have when making decisions on crypto assets

why the commissioners believe CFTC’s complaints regarding BitMEX are “well-founded”

why formal regulation for crypto derivatives is unlikely to be produced by the CFTC

why leveraged derivatives products are a “concern” to the CFTC

what makes regulating DeFi platforms so difficult

when it comes to DeFi, who is a natural entity for the CFTC to regulate, if any

whether the CFTC would ever go after DeFi "market participants," who the CFTC also regulates

why smart contracts involving futures could be illegal 

how the possibility that smart contracts could be illegal squares with the view that software development is a form of free speech 

whether the CFTC could prosecute developers who write smart contracts

whether the CFTC needs to re-write its laws in light of DeFi innovation

why Commissioner Berkovitz thinks the DeFi “winners” will be protocols that focus on meeting regulatory requirements

why the CFTC approved Bitcoin futures in 2017 while the SEC has not yet approved a Bitcoin ETF

how a Bitcoin ETF could solve Bitcoin’s accounting issue, which currently gives companies no upside for adding BTC to its balance sheet

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Episode Links

People

Dan Berkovitz, CFTC Commissioner (Sep 2018+)

CFTC website: https://www.cftc.gov/About/Commissioners/CommissionerDanMBerkovitz/index.htm

Twitter: https://twitter.com/CFTCberkovitz 

Brian Quintenz, CFTC Commissioner (Aug 2017+)

CFTC website: https://www.cftc.gov/About/Commissioners/BrianQuintenz/index.htm

Twitter: https://twitter.com/CFTCquintenz 

Related Links

CFTC digital asset resources: https://www.cftc.gov/digitalassets/index.htm

Commissioner Berkovitz DeFi speech: https://www.theblockcrypto.com/linked/107769/cftc-commissioner-criticizes-defi-decries-lack-of-intermediaries

Commissioner Quintenz smart contracts/blockchain speech: https://www.cftc.gov/PressRoom/SpeechesTestimony/opaquintenz16

CFTC jurisdiction over digital assets: https://www.cftc.gov/PressRoom/SpeechesTestimony/giancarlostatement010418 

CFTC BitMEX complaint: https://www.cftc.gov/PressRoom/PressReleases/8270-20

FTX and Binance remove high leverage: https://decrypt.co/76858/ftx-and-binance-remove-high-leverage-from-exchanges

SEC Commissioner Hester Peirce’s safe harbor proposal: https://www.sec.gov/news/public-statement/peirce-statement-token-safe-harbor-proposal-2.0 

Bitcoin futures approval from CFTC in 2017: https://www.businessinsider.com/bitcoin-price-futures-trading-exchanges-cftc-2017-12

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