Congressman Warren Davidson has unveiled the Evaluating Defi Opportunities Act, aimed at fostering data-driven regulations for decentralised finance (defi).
He emphasised the need to protect innovation and user privacy while addressing concerns regarding potential overregulation.
This proposed study by key financial regulators seeks to balance the growth of defi with appropriate oversight, ensuring the sector's competitive edge and resilience are maintained.
Davidson highlighted that defi plays a vital role in the future of capital markets but raised concerns about the Biden-Harris administration's regulatory approach.
He stated, “This legislation guarantees that data-driven financial regulations could be implemented by the federal government without interfering with the development of digital markets or jeopardising the user privacy that defi provides.”
With an increasing number of users, the total market capitalisation of defi has surged to an estimated $75 billion.
However, Davidson warned that overregulation could stifle innovation and drive investment abroad.
The proposed study aims to help regulators understand the benefits of defi, including blockchain's operational resilience, market competition, and user privacy protection.
Davidson emphasised the importance of a "carefully measured approach" to ensure that defi can thrive without compromising user privacy or innovation.
He concluded, “Decentralized finance is essential to the future of capital markets,” while expressing concern that “the Biden-Harris administration is trying to regulate defi out of existence without understanding the risks or benefits.”