Jerome Powell not fully down with DeFi, says he's not worried

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Jerome Powell not fully down with DeFi, says he's not worried

Jerome Powell may not be fully down with DeFi but he isn't taking the tough line other regulators are pursuing in the latest crackdown on crypto.

The meeting was hosted by the Banque de France in Paris on Tuesday, which aimed to raise awareness about the tokenization of finance. The Fed's chair, Powell, presented a nuanced stance on DeFi.

As many regulators prefer, he favors establishing rules in decentralized finance. But he cautioned against Hastily passing restrictions without properly assessing the damage they could cause the fledgling industry. Powell also said there shouldn't be a rush to regulate because crypto doesn't pose a systemic risk to traditional finance.

Powell said as for a digitalized dollar, that the Fed is in no hurry to launch a CBDC. The Fed will then work with the U.S. Congress and the Biden Administration to evaluate policy and technological issues.

Powell said a CBDC program should have four capabilities, which it should be intermediated, privacy-protected, identity-verified, and interoperable.

s traditional banking system as well. Powell said he was confident he would not lose his job.

The president of the European Central Bank contrasted with the president of the European Central Bank, Christine Lagarde, who sets monetary policy for the 27-nation European Union.

Lagarde described how crypto came from a fringe idea embraced by libertarians to a payment system embraced by stalwarts like Visa, Mastercard, and PayPal. Lagarde highlighted the $60B collapse of Terra and said the failure demonstrated the need for strict regulation. She said Terra's position in the crypto industry was 'abused'.

Lagarde also said central bankers are legally required to study blockchain technology.

The focus on the risks of DeFi is increasing, he said. Agustin Carstens, the senior manager of the influential Bank of International Settlements in Switzerland, said DeFi apps are vulnerable to the same peril found in traditional finance, including liquidity risk, counterparty risk, and leverage risk. He added that DeFi hasn't had the necessary infrastructure to tackle these challenges.

The forum is at a febrile stage in crypto regulation. South Korea is said to be seeking to question Do Kwon, the founder and a native of the Asian nation, and freeze his assets. South Korean prosecutors have asked South Korean authorities to cancel his passport. The news that Interpol has issued a Red Notice for the entrepreneur's detention by member nations suggests he is on the run.

On Sept. 17, Do Kwon tweeted he is cooperating with authorities. He added that he did not know what he was talking about on the run or anything similar.

The head of the SEC, Gary Gensler, has proposed that proof of Stake cryptocurrencies such as Solana and now, Ethereum, may be deemed securities and subject to registration requirements.

The Commodity Futures Trading Commission angered DeFi traders last week when it filed a lawsuit against the company for failing to register its offerings as derivative securities. The U.S. lawmakers are also considering legislation that could ban certain algorithmic stablecoins for a period of two years.