CFTC Introduces Risk Mitigation Policies for DeFi Projects
Christy Goldsmith CFTC Commissioner recently noted that the regulatory agency is conducting research on the investment risks associated with digital currencies. The official informed that the regulators are working on the impact of investment risks associated with digital assets.
On this account, CFTC published a report to add recommendations for policies and businesses in terms of risk mitigation present within the scope of the DeFi sector.
The Digital Assets and Blockchain Technology Subcommittee analysts at CFTC noted in the report that the sector is primed for upcoming opportunities. The report also pointed out the probability of risk exposure for the financial system of the United States, citizens, and national security matters. On this account, the regulator added different risk mitigation methods in the report.
CFTC’s Blockchain Committee
The Blockchain Committee of CFTC recently noted in a risk mitigation report that the agency can utilize measures such as technical definition, identification of risk factors, policy responses, and vulnerabilities.
The report further noted that the industry is introducing new projects and creating innovative solutions. At the same time, the report suggested that policymakers have to focus on the most important goals for the implementation of the regulatory framework.
At the same time, the agency further noted that the regulators have to ensure that the regulatory implementation takes place without needing an overall shutdown. At the same time, regulators have to account for the cost of applying regulatory changes in addition to minimal reactions to strike a balance between costs incurred and profit increments.
At the same time, the report noted that regulators have to open fair and unbiased communication channels with DeFi stakeholders.
CFTC Regulators Recommend DeFi Policies Considering International Standards
The report suggested that the DeFi regulatory framework should be aligned with international standards. At the same time, Goldsmith announced that there is a need to read risks associated with digital assets and their impact on the overall cryptocurrency markets.
The commissioner also noted that during her tenure at CFTC, she has studied the risks that are associated with digital currencies that could lead to negative consequences for investors.
The official also noted that the report may serve as a basis for starting a dialogue between regulators and DeFi sector participants. She also referenced the portion of illegal activities, security concerns, unreported thefts, and other issues that are associated with this sector.
Fidelity Prediction for the DeFi Sector
Asset management firm Fidelity recently published a report noting that institutional investors may acquire DeFi yield in 2024 on account of Federal Reserve policies regarding interest rates. However, the report conditioned that institutional investors are only likely to invest in the DeFi sector provided that it has developed infrastructure.
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