Lawmakers on the U.S. House Financial Services Committee’s Digital Asset Task Force discussed related issues including tokenization, decentralized finance (DeFi) and how to regulate DeFi at a hearing on Tuesday. The meeting revealed the differences between the two parties on the issue.
At the beginning of the hearing titled "Decoding DeFi: Dissecting the Future of Decentralized Finance," Republican Rep. French Hill, chairman of the subcommittee, said: "As we consider how to apply blockchain to finance, we must continue to Expand our understanding of the possible costs and benefits related to DeFi. "He believes that if legislators do not understand the core concepts of blockchain, they cannot legislate thoughtfully and do a good job of supervision by regulatory agencies.
Hill pointed out that by replacing intermediaries with autonomous, self-executing codes, DeFi can change the current structure and management of financial markets and transactions. "In a peer-to-peer future, the future prime minister of Canada cannot freeze you because you went to a protest." your bank account". He was alluding to law enforcement actions authorized by Canadian Prime Minister Justin Trudeau in 2022 in response to the Freedom Rides protests.
At Tuesday’s hearing, cryptocurrency critics like Democratic Congressman Brad Sherman disagreed, claiming that DeFi is used only for crime, circumventing sanctions, and primarily to evade taxes.
U.S. lawmakers have not addressed regulation of DeFi in recent bills. Among bills passed by the House over the past year, lawmakers have chosen to direct the Treasury Department, Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC) to study DeFi. The Republican-led "Financial Innovation and Technology Act for the 21st Century" (FIT21) gives the CFTC new jurisdiction over "digital commodities" and advocates that the SEC regulate digital assets provided as part of investment contracts.
Democratic Congressman Stephen Lynch said that neither regulators nor the industry itself has a "consensus definition" of DeFi. He also criticized the entire cryptocurrency industry, saying it has been disrupted by multiple "crash events" and calling for legislation.
"This committee should explore digital asset issues such as DeFi and tokenization long before legislation is introduced." Lynch said: "The FIT bill, which I strongly oppose, excludes DeFi services, and I urge the committee to avoid advancing similar legislation because it will Legalizing the industry incurs the same consumer and investor protection risks."
Mentioning the encryption project promoted by the Trump family
Senior Democratic congresswoman Maxine Waters criticized World Liberty Financial, a cryptocurrency project supported by former US President Donald Trump, at the hearing. Trump’s two sons – Donald Trump Jr. and Eric Trump – are the driving forces behind this new DeFi project.
World Liberty Financial has yet to announce its specifics, but it has faced challenges so far. Last week, Trump’s second daughter-in-law, Lara Trump, and daughter, Tiffany Trump, had their X accounts allegedly hacked and shared scam articles promoting tokens purportedly related to World Liberty Financial.
Waters said that DeFi aims to create greater efficiency and transparency, but it may also bring greater risks such as hacking, fraud, asymmetric information and conflicts of interest, thereby harming the interests of consumers and investors, "We This is already seen in the new DeFi venture called World Liberty Financial that Eric Trump and Donald Trump Jr. plan to launch.” "Lawmakers have a responsibility here," Waters added.
Source: The Block, Cointelegraph
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