The United States commodity regulator got a crash course on decentralized finance (DeFi) today, with crypto executives briefing regulators on key issues affecting the space, including exploitation, decentralization and digital identity.
As part of the first meeting of the CFTC’s Technology Advisory Committee (TAC) in Washington DC, members from the crypto space gave presentations to the regulars with the aim of covering the main issues currently affecting DeFi.
CFTC Commissioner Christy Goldsmith Romero opened the meeting with prepared remarks, saying “understanding how DeFi works” is “important” as “policy decisions related to DeFi” are now being made by regulators and lawmakers.
A great day sponsoring the CFTC’s Technology Advisory Committee. Expert presentation on #Decentralized Finance #CyberResilience #Noon and # Work intelligence. Many thanks to Carol House Committee Chair, Vice Chair @ARedbord and all TAC members and presenters. pic.twitter.com/kByy2aDPq4
— Commissioner Christy Goldsmith Romero (@CFTCcgr) March 23, 2023
The panel began with an explanation of DeFi and blockchain technology by Ari Redbord, head of legal and government affairs at blockchain intelligence company TRM Labs.
He outlined the claimed benefits of blockchain, namely transparency, immutability and privacy which he said could allow regulators to balance “the right to privacy with the need for security.”
On the subject of decentralization, Redbord together with Nikos Andrikogiannopoulos, the founder of analytics company Metrika, jointly outlined the benefits and problems currently facing decentralization concluding that the benefits “greater than” the challenges that he believes will “solve themselves.”
Glad to be involved@CFTCThe TAC meeting is sponsored by@CFTCcgrChristy Goldsmith Romero, Chair Carole House and Vice Chair Ari Redbord@trmlabs pic.twitter.com/QCXmpQ4cci
– Kristin N. Johnson (@CFTCjohnson) March 22, 2023
“We have reached a time when we cannot ignore decentralization,” Andrikogiannopoulos said. “Not only do we have to embrace it, but I think it’s our job to guide it in the right direction.”
Redbord highlighted the amount of value that has flowed into DeFi over the past two years, saying it was “stress tested during FTX. […] and did not fail. DeFi is here to stay.
Currently DeFi’s Total Value Locked (TVL) is around $49.1 billion according to DeFiLlama, up from around $15 billion at the start of January 2021.
Carole House, executive in house of venture firm Terranet Ventures and Jill Gunter, CSO of blockchain infrastructure company Espresso Systems then gave an overview of current solutions for digital identity and non-custodial wallets, using the example of Ethereum Name Service and MetaMask. wallet.
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The founder of Fireblocks, Michael Shaulov and the founder of Trail of Bits, Dan Guido then presented the exploits and vulnerabilities that have, and continue to take place in the market.
“All hacks, they are incredibly common and usually users and other outside companies know about them before you do them,” said Guido who said that it is “necessary for perfection” in crypto companies.
Throughout 2022, the top 10 exploits in crypto alone lost more than $2 billion and DeFi gained 113 exploits out of 167 conducted during the year.
Shaulov then gave a brief account and explanation of the exploits he did against Ronin Bridge, BadgerDAO and the recent exploits of Euler Finance’s DeFi protocol.
The DeFi portion of the meeting ended with members unanimously agreeing to create a Digital Asset and Blockchain Technology Subcommittee.
The subcommittee will focus on the “why of DeFi,” what problems it solves and its applications along with vulnerabilities and proposed legal and policy frameworks.
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