Eric Voorhees, Founder of Shapeshift and Longtime Bitcoin Advocate believe Decentralized finance (DeFi) has already solved the regulatory clarity problem that prevents people from owning and trading most cryptocurrencies.
The crypto industry is aware that all but the four cryptocurrencies listed on the newly launched EDX market (BTC, ETH LTC, BCH) may be banned from trading in the United States. Are concerned.
Industry fears EDX’s listing is a reflection of regulatory sentiment and portends a line drawn between these four cryptocurrencies and all others, in that the latter is a security. .
Bitcoin, Ethereum, Litecoin, and Bitcoin Cash are the only four cryptocurrencies that regulators have officially recognized as non-securities. Meanwhile, SEC Chairman Gary Gensler has repeatedly said that all other cryptocurrencies are considered securities by regulators for all intents and purposes.
EDX is backed by traditional financial giants like Citadel Securities, and there are concerns that regulatory restrictions will allow Americans to trade these four cryptocurrencies only on Wall Street-controlled exchanges. is rising further.
The four exchange-listed tokens generated a lot of interest in the days that followed, with BCH and Litecoin posting impressive gains.
DeFi is the solution
Many are calling for the industry to come together and make a concerted effort to ensure that altcoins are not left behind in the United States.
But Voorhees said this is a problem that already has a solution in the form of DeFi.
Voorhees said DeFi is inherently “permissionless,” which means people can rely on decentralized protocols if they want to trade and own altcoins that aren’t listed on a centralized exchange. Stated.
DeFi protocols do not require regulatory clarifications or permits to operate, and there is little government intervention beyond making DeFi-related transactions illegal.
According to Voorhees,
“they [governments] You can write any law you want. The protocol continues to work regardless… which is very powerful. ”
Bitcoin on-off ramp
One of the major drawbacks of DeFi protocols is the lack of fiat on-off ramps with traditional banks. This means that without a fiat currency connection, altcoins cannot be used for everyday transactions such as buying groceries.
Most people get around this by using centralized exchanges with such on-off ramps, or peer-to-peer marketplaces where supported cryptocurrencies can be exchanged.
Compared to DeFi, listings on centralized exchanges like Coinbase and even Binance are limited. The crypto industry is concerned that these options may be further limited to just four cryptocurrencies.
However, Voorhees believes this is not a problem and does not hinder DeFi protocols or altcoins. He said the industry only needs a “single ramp to banks” to function, and this role could easily be filled by Bitcoin.
People are already converting unlisted cryptocurrencies into Bitcoin, Ethereum, and stablecoins when it comes to fiat currency conversions, and this practice will continue in the U.S., albeit in a more limited form.
Voorhees’ argument goes back to the root of why Bitcoin and DeFi were created in the first place: to give people financial freedom of choice.