Even those who are most suspicious of the rise of cryptocurrency will likely admit that the underlying blockchain technology and its potential uses are exciting. One use of this technology, decentralized finance, or DeFi, is on the cusp of major growth. Regulators are aware of this growth and are moving to act accordingly. As a possible preview of the coming regulatory efforts, this past spring Treasury Secretary Janet Yellen urged regulators to accelerate their establishment of a regulatory framework for stablecoins, a rapidly growing class of digital currencies which, among other things, can be used on DeFi platforms to temper pricing volatility.1

Since Secretary Yellen’s comments, Securities and Exchange Commission Chair Gary Gensler has made it clear that the regulation of DeFi platforms and stablecoins is on the SEC’s agenda.2 Earlier this month, he wrote to Senator Elizabeth Warren that both should be among Congress’ legislative…

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