Today, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, led by Chairman French Hill (AR-02), is holding a hearing entitled “Decoding DeFi: Breaking Down the Future of Decentralized Finance.”
Chairman Hill welcomed members and staff back to Capitol Hill following their August work period. He emphasized the importance of discussing decentralized finance (DeFi) in light of the FIT21 legislation, which passed with broad bipartisan support. Hill stated his intention for the subcommittee to explore emerging topics such as tokenization and DeFi.
Hill described decentralized finance as envisioning a financial system that is permissionless, transparent, efficient, and built on blockchain networks. He highlighted that DeFi aims to allow individuals to transact freely without fear of illegal financial surveillance or government abuse. By replacing intermediaries with autonomous, self-executing code, DeFi could transform current financial markets and transaction structures.
He noted that understanding complex technologies like artificial intelligence and digital assets is crucial for thoughtful legislation and effective oversight of regulatory agencies. "DeFi is not only complex but cutting edge," he said.
Hill stressed that decentralized finance should be viewed as a technology connecting people to reimagine transactions rather than as a person or company. The hearing aims to delve into core concepts behind DeFi and encourage open-minded dialogue among committee members.
Witnesses will discuss how DeFi works, its potential benefits and risks, and its legal and regulatory implications. Hill pointed out that existing regulatory frameworks were designed for centralized intermediaries and do not account for the decentralized ecosystem enabled by digital assets and blockchain.
He mentioned that jurisdictions like the European Union have explicitly addressed DeFi in their digital asset legislation to better understand it. Similarly, the FIT21 legislation directed U.S. Treasury, SEC, and CFTC to study DeFi's implications and report back to Congress.
Hill contrasted this approach with that of the Biden-Harris Administration's use of rulemaking and enforcement actions against DeFi. He emphasized the need for assessing DeFi collaboratively following the passage of FIT21 legislation.
In conclusion, Hill encouraged an informative dialogue with witnesses about how Congress can help Americans access this technology safely. He expressed gratitude to the panel's witnesses for sharing their expertise.