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The White House released its annual economic report on March 20, dedicating an entire section to digital assets.
Authors should be commended for doing so. I generally agree with the report’s assessment that certain aspects of the digital asset ecosystem are causing problems for consumers, the financial system and the environment.
However, as a builder in the digital asset space, I cannot agree with the conclusion that “crypto assets currently do not offer widespread economic benefits.”
To understand how the White House regulates digital assets, it’s important to examine what was left out of the White House report. Not particularly noteworthy among the data that produced the report is a list titled “Top 10 Open Interest Crypto Derivatives Platforms.” This included offshore exchanges such as BingX, Deepcoin and BTCC Futures.
Most digital asset proponents would agree with the report that these exchanges have never had a good reputation and that open interest is an easily manipulated metric, but neither is it over there. The real question is why the White House report chose to focus on offshore exchanges that have no checks and balances and are not even open to US-based users.
Even more obvious is the fact that it chose to completely ignore Bitcoin, the largest derivative product available to US-based users. (BTC) and Ether (ETH) futures are offered by the Chicago Mercantile Exchange (CME).
Related: What Paul Krugman Gets Wrong About Cryptocurrencies
CME is an entity fully compliant with all U.S. laws and regulations, and the recent launch of Micro Bitcoin and Micro Ether futures provides retail investors access to safe and regulated U.S.-based futures derivative products. You can now access it. .
Why did they choose to omit mention of CME?
Is it because it calls into question the SEC’s position that CME can only list commodities and ETH is a security?
Furthermore, none of the platforms mentioned by the White House are well-known among crypto-native investors. This may be due to the fact that there are relatively few derivatives exchanges in the market and none of these exchanges seem to fill the void left by FTX, but another omission is very It is important.
The White House report also fails to mention Deribit, the largest options exchange by volume and open interest. Based in the Netherlands but not available to US users, the company focuses on education and outreach and is much more transparent than most companies on the market. Was it not?
The White House deliberately excludes legitimate businesses from its list of derivative platforms. This is a position likely to be taken to paint digital assets as shadowy and insecure assets.
Derivatives such as futures and options are core components of any financial system. The United States and the White House will benefit from a flourishing digital asset economy, including the derivatives and options markets. And I agree that the exchanges mentioned in the White House report are actually very risky.
But what the White House lacks is that there are better alternatives. It is decentralized finance (DeFi) that can no longer be hidden, is transparent, non-binding, cryptographically secure, and completely open source.
DeFi is completely non-custodial and has no intermediaries, so there is no “entity” to regulate, as users are always in control of their funds. Restrict access. All lending protocols are overcollateralized and, in contrast to fractional reserve banks, balances are instantly auditable.
Related: Did regulators deliberately crack down on banks?
Lack of regulatory clarity from the US SEC and CFTC hinders innovation in the derivatives space.
Most DeFi protocols can and should follow the guidelines of self-regulatory organizations such as financial industry regulators to protect all users. Clearly defined regulations exist in every industry, but coercive regulation stifles innovation. I see this directly as a builder in the digital asset space, but the lack of clarity makes it impossible for a US-based company to even enter the US market.
Proponents of digital assets know about previous financial crises. Most of us have lived through the hell he has unfolded since 2008 due to bank deregulation. Our goal is to rebuild the financial infrastructure from scratch in the most transparent way. and The safest way possible. DeFi is powered by mathematically unbreakable cryptography, and offshore-based centralized exchanges are the shadow banks of this generation.
Builders of the DeFi space want To build the most secure financial system in history. We want to empower citizens of the world, not private banks and runaway financiers.
And we stand ready to work with governments, central banks, and regulators, regardless of what US regulators think. We need to know that you are arguing in good faith.
Guillaume Lambert Founder and CEO of Panoptic and Assistant Professor of Applied Physics at Cornell University. His research at Cornell focuses on biophysics. He has his Ph.D. He holds a PhD in Physics from Princeton University.
This article is for general information purposes and is not intended, and should not be construed as legal or investment advice. The views, thoughts and opinions expressed are those of the author and do not necessarily reflect or represent the views or opinions of Cointelegraph.