Decentralized Finance Platforms Warned by CFTC
The Commodity Futures Trading Commission (CFTC) has issued a warning to operators of decentralized finance (DeFi) protocols, taking legal action against platforms including Opyn, ZeroEx, and Deridex.
The charges filed against Deridex and Opyn include failure to register as a swap execution facility or designated contract market, failure to register as a futures commission merchant, and failure to adopt a customer identification program as part of a Bank Secrecy Act compliance program. ZeroEx, Opyn, and Deridex were also charged with illegally offering leveraged and margined retail commodity transactions in digital assets.
As a result, Opyn, ZeroEx, and Deridex have been ordered to pay civil penalties and cease any violations of the Commodity Exchange Act and CFTC regulations.
Hot Take: DeFi Operators Face Regulatory Scrutiny
The CFTC’s Director of Enforcement, Ian McGinley, emphasized that DeFi operators cannot assume that smart contracts make unlawful transactions lawful. The CFTC will continue to pursue unregistered platforms facilitating digital asset derivatives trading.
Digital Asset Protocols in Question
Opyn developed a blockchain-based digital asset protocol that offered trading of oSQTH tokens, which were derivatives based on the price of ether squared relative to the USDC stablecoin. The CFTC classified these tokens as swaps and leveraged commodity transactions, requiring registration on a compliant exchange.
Deridex offered perpetual contracts, while ZeroEx developed a digital asset protocol and front-end application called Matcha for trading digital assets across different blockchains.
ZeroEx acknowledged its cooperation with the CFTC, resolving an inquiry regarding a small portion of Matcha’s trading volume. The company expressed its commitment to compliance and implementing additional processes based on regulatory dialogue.
Hot Take: Regulatory Compliance Crucial for DeFi Success
These actions highlight the importance of regulatory compliance in the evolving DeFi space. DeFi platforms must adapt and work with regulatory agencies to drive sustained adoption and ensure the legality of their operations.
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