The Yearn Finance founder suggested that several cracks have shown in
the crypto sector this year, and that regulation is needed to “reign in
irresponsible actors.”
Respected former decentralized finance (DeFi) project founder and
developer Andre Cronje has resurfaced after a lengthy hiatus to call for
tighter regulations on the crypto sector amid the implosion of multiple
firms this year.
The comments echo similar sentiments to that of FTX CEO Sam Bankman-Fried (SBF), who also called for more stringent digital asset industry standards last week, including greater consumer protections, transparency, and disclosures.
SBF was met with strong community pushback however, with many people accusing the CEO of trying to monopolize or censor the DeFi space, among other things.
In an Oct. 25 blog post
titled “The Crypto Winter of 2022,” Cronje called for greater
regulation of the sector, noting that “the recent decline of the
crypto-market has shown the flaws in the system and the need for
regulation to reign in irresponsible actors and protect consumers.”
Cronje
added that it had been a grim year for the crypto sector as he pointed
to the collapse of the Terra LUNA ecosystem and several crypto firms —
particularly crypto lenders, which has left consumers reeling:
“The
resultant issues which appear to be most problematic are where users’
cryptocurrencies are locked in accounts handled by exchanges, or where
the management of their funds is left in the hands of others.”
He
went on to call for greater consumer protections, especially concerning
crypto exchanges and crypto investment service providers, as
highlighted the complex case of users getting their funds back from the
ongoing Celsius bankruptcy case.
“Remedies under the current
regulatory regime are ineffective. Most investors sign away their rights
to their crypto in voluminous terms and conditions of crypto-exchanges
and many will (at best) rank as unsecured creditors should these
exchange services be liquidated,” he wrote.
The former DeFi
developer details current solutions used in traditional finance that the
crypto sector hasn’t yet introduced, including deposit insurance,
prudential supervision, and consumer remedies in “being able to approach
the relevant prudential authority, or at least using overarching
legislation as a framework.”
Regarding deposit insurance, Cronje
emphasized the importance of central banks across the globe adhering to
mandatory insurance practices to ensure consumer funds are protected.
Related: US lawmakers question regulators over ‘revolving door’ with crypto industry
Under
such practices, it generally means that people have a viable and
relatively straightforward route to getting their funds back, unlike in
the case of Celsius.
“The safety net of deposit insurance is a
remedy available to consumers in traditional banking which is not
available to depositors into crypto-exchanges (like Celsius),” he wrote.
Regarding
prudential supervision, Cronje said that overarching authorities in the
sector could improve confidence in crypto, such as the case of central
banks supervising private banks on factors such as “capital, asset
quality, soundness of management, earnings, liquidity, and sensitivity
to risk.”
Cronje is seen as one of the most influential figures in
the DeFi movement, due in part to launching Yearn Finance in 2020 and
his work on several other DeFi protocols. In March, however, he
announced that he was stepping away from working in the industry entirely.
source link : https://cointelegraph.com/news/defi-pioneer-echoes-sbf-in-call-for-tighter-crypto-regulations
