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‘Is ETH a Security?’ Why Gary Gensler Couldn’t Give Congress a Straight Answer - Ep. 483

Unchained

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DeFi and the Flaw of Misclassification

DeFi protocols represent distinct financial products, akin to unique fruits, each with specific functionalities. The SEC's regulation incorrectly forces these products into a framework designed for traditional financial models, likened to mammals, ignoring their inherent characteristics. This misclassification risks undermining the foundational principles of DeFi. Additionally, the reliance on intermediaries for compliance is inherent in the SEC's regulatory approach, which stems from the challenge of comprehensive oversight. DeFi inherently promotes disintermediation, complicating the SEC’s existing enforcement strategy, highlighting a significant disconnect between traditional regulatory frameworks and innovative financial technologies.

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