Anderson McCutcheon, CEO of Chains.com, gives his opinion on DeFi and its absence in the regulatory framework.
Decentralized Finance (DeFi) is a solution based on Blockchain technology, which refers to peer-to-peer financial services, running on a public Blockchain like Ethereum, without intermediaries, and running through smart contracts.
There is an increasing interest in cryptocurrencies and Decentralized Finance, which has allowed their unstoppable advance in the financial market. An example of the progress of this disruptive technology is the fact that “users can interact with financial products” and, very particularly, “generate programmable money instead of products.”
Anderson McCutcheon, Founder and CEO of Chains.com, believes that DeFi currently operates outside of a regulatory environment, relative to other disruptive developments that have occurred in other ecosystems, and that it has “forever changed the way financial systems are designed.”
In addition, the expert states that cryptocurrencies are under the spotlight by regulators, setting their sights on anonymous digital currency transactions, while “FinCen” regulations focus on non-custodial hard wallets.
The current infrastructure bill approved a few months ago by the United States Senate includes a section that deals with cryptocurrencies and the transactions that take place with them. Likewise, there is the proposal for a payment license for anyone who wants to have a stake in a network, including managing activities or establishing a node.
McCutcheon also considers that the new proposals of the bill add difficulties to the sector and support the entities that can obtain the license. This leads to the promotion of “centralization in an industry built around decentralization”, alienating occasional investors and unwilling to profit from the industry with such high commissions.
Specifically, McCutcheon indirectly promotes a non-decentralized industry, despite this being the purpose of its creation.
DeFi Evolution
Since its inception, its very name says “Decentralized Finance”, the creation of the sector was so that there would be no type of intermediary between the user and the product other than the Blockchain network through which the operation is carried out.
This execution mode is the same one that allowed anonymity to exist within DeFi from the beginning, according to McCutcheon “the deadly sin was that there was no one to hold responsible for the failure or success of these projects.” However, he stated that DeFi is still more “transparent” than CeFi.
However, just as it allows the presence of anonymity, it also opens doors and even makes it easier for the scammer or attacker to carry out their fraudulent acts without having someone to hold responsible.
Regulatory Framework for Cryptocurrencies
In McCutcheon’s opinion, the fact that many of the existing digital assets are traceable gives way to “each centralized entity being able to comply with the regulatory infrastructure of each jurisdiction in which it operates.”
Thus, according to the above, the fact that they are traceable puts some pressure on the holders of cryptocurrencies to keep up to date with respect to tax matters. The example discussed by the expert was the payment of taxes on cryptocurrencies.
McCutcheon said that, “If a cryptocurrency participant fails to pay their taxes, the IRS does not hesitate to take action by sending the necessary letters to crypto holders, advising them that they have an obligation to bring their tax obligations up to date.”
McCutcheon concluded that, “The closer we get to a clear and robust framework, the closer we will be to creating a more transparent space that offers more value to retail participants.”
By Audy Castaneda
