House Financial Services Subcommittee Chairman French Hill emphasized the need to understand decentralized financial technologies during the hearing. He criticized the Biden administration’s regulatory approach and urged Congress to continue the discussion on supporting defi innovation. Hill noted that current regulatory frameworks were created for a system that relies on centralized intermediaries, not a decentralized peer-to-peer ecosystem powered by digital assets and blockchain.

House Subcommittee Explores the Future of Decentralized Finance

The House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion, led by Chairman French Hill, held a hearing on Tuesday titled “Decoding Defi: Analyzing the Future of Decentralized Finance.” The session is part of an ongoing effort to explore the potential and risks associated with decentralized financial (defi) technologies.

In his opening remarks, Congressman Hill emphasized the importance of understanding the transformative potential of defi for financial markets. He described defi as “a permissionless, transparent, and efficient financial system built on a blockchain network.” According to Hill, the goal is to consider both the benefits and challenges of defi. He explained:

It is important to remember that our legal and regulatory framework was designed for a financial system with centralized intermediaries. It does not take into account the decentralized, peer-to-peer ecosystem that is possible with digital assets and blockchain.

Hill notes that legislation like the Financial Innovation and Technology for the 21st Century Act (FIT21) aims to further explore these decentralized ecosystems.

The lawmaker also criticized the Biden administration's approach to regulating the crypto sector, arguing that regulatory actions threaten the future of defi. He emphasized:

The Biden-Harris administration is using legislative and enforcement actions to go after defi.

He encouraged members of Congress to engage in open dialogue to determine how to regulate this technology while still supporting innovation.

What do you think about Congressman French Hill’s concerns regarding defi regulation and the future of decentralized finance? Let us know in the comments below.
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