In what appears to be a sort of crypto-phobia, veteran politicians in the United States and other countries have repeatedly lashed out attacks at the crypto community. US Senator Elizabeth Warren’s latest target seems to be DeFi, or decentralized finance. Calling it the ‘most dangerous’ component of the crypto space, she called for stricter regulations on the sector. In a meeting of the Senate Banking Committee, Elizabeth Warren said that Defi is the most dangerous and potentially harmful aspect of cryptocurrencies, and it can rattle national economic stability. The issue came up in the context of stablecoins when Warren asked Hilary Allen about the potential downsides of a run on stablecoins. Hillary Allen is a professor of law at the American University Washington College of Law. While Hilary reassured that such a phenomenon is very unlikely, Warren took the chance to lash out against Defi.
Defi, or decentralized finance, offers a radically different model to transact with each other and facilitate payments. By taking the intermediary out of the equation, Defi assures that power structures will not hinder economic transactions. While it is a movement for greater transparency and inclusivity, institutional position holders have always been against Defi. Part of the reason lies in the fact that Defi is already weakening financial institutions. While some senators look at Defi as the future of the economy, others like Warren seem to be stuck in a loop. How this resolves and what its implications are on Defi are still subject to speculation.
