Today, ParadigM has submitted a letter of comment to the Commodity Futures Trading Commission (CFTC) responding to its request for a contribution on the list of punctual cryptographic assets on the designated contractual markets (DCMS). Although the proposal focuses on the authorization of these assets to negotiate centralized term scholarships, our letter calls on the CFTC to ensure that all the new rules protect and also make it possible to negotiate the DEFI protocols.
The noble objective of the CFTC is to transmit the trading of punctual cryptography in well -regulated environments which protect the integrity of the market, to prevent fraud and to promote innovation. We agree with this mission. But, as we explain in our letter, Blockchain technology has already moved the market beyond the DCM model of the 19th century. Today, a large part of the most innovative and transparent trade occurs on Defi, where users retain their assets, exchange peer peers and benefit from open and verifiable blockchain registers.
These protocols progress each basic objective of the law on the exchange of goods, in particular those who have focused on the support of the ultimate class of people protected by CEA: regular traders and Americans.
- Users can place their commands directly to the protocol using passive software that preserves total user control over their trading and assets. Consequently, users are not confronted with the frontal race, a diversion and similar driving risks present during the negotiation of an intermediary. DEFI is one of the best technologies we have to empower ordinary users.
- Protocols generally operate on a basis without authorization and autonomous. No person or group of generally controlled persons can block or censor access or trade or exercise another discretion on the functioning of the protocol. These characteristics natively guarantee impartial access and reduce conflicts of interest. They also create new forms of competition for existing markets and are a trade in trade in trade.
- Protocols deployed on public books provide users and general public information available on prices and exchanges, which promotes the discovery of prices and more efficient and transparent markets. Such transparency helps to confirm the sacredness and honesty of our markets and increases confidence in our financial markets among users and the American people.
Digital assets’ worker’s working group has clearly indicated that DEFI support is a priority for the administration, urging regulators to “adopt decentralized finance” to position the United States as a world leader. The CFTC does not need to wait until the Congress acts; The existing authority under article 4 (C) of the CEA allows the agency to exempt the trade of challenge from obsolete intermediation requirements, which favors innovation and fair competition.
We urge the CFTC to use this authority to allow retail users to negotiate the crypto spot, including leverage or margined, as well as any new DCMS. Such actions should not disadvantage the ability of users to exchange DEFI protocols.
Paradigm is looking forward to working with the CFTC and the wider political community to create clear and prospective rules for cryptographic markets. Our full letter is available here.
