The article discusses key concepts in decentralized finance
(DeFi), including use cases for the technology, differences between
permissionless and permissioned DeFi, and the respective advantages
of participating in DeFi versus centralized finance (CeFi)
platforms. Highlighting particular differences between DeFi and
CeFi, Dan and Sheehan note that many question how DeFi can be
regulated, and in turn, some assert that DeFi should not be subject
to regulation.
The article analyzes key arguments in favor of and against
regulation of DeFi in the context of the recent crypto asset market
instability, including an examination of various legal theories of
liability under which regulators seek to identify bad actors and
penalize harmful activity. Further, Dan and Sheehan offer an
overview of recent statements and enforcement activity by several
US-based regulators, as well as pertinent executive and legislative
developments that could impact the DeFi space.
“Does Decentralized Finance Equal Deregulated
Finance?,” Journal of Financial
Compliance (Volume 6, Number 2), Winter
2022–2023
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