'Dark Phase' Ahead on DeFi Regulatory Front, yearn.finance Creator Warns
A “dark phase” may be ahead in the relationship between the decentralized finance (DeFi) space and financial regulators, yearn.finance (YFI) creator Andre Cronje has warned the community, adding that once this phase passes, “a different future” awaits those who made it through.
The comments from the outspoken DeFi founder came during a virtual panel discussion titled ‘The Future of DeFi’, hosted by crypto researcher Messari for its Mainnet 2021 event in New York City on Tuesday.
In the discussion, moderated by investor and partner at the DeFi Alliance Qiao Wang, Cronje said that developers and creators in the space should expect things to get more difficult with regulators in the near-term before they get better.
This will likely force more people in the space to be pseudonymous, and avoid incorporating any legal entities, the Yearn creator further suggested, before ending on a positive note:
“But eventually, they [the regulators] are going to find out that there is nothing they can do, and then they are going to move to acceptance,” Cronje said, adding that when we get to that point, “we’re going to see a different future.”
Cronje did not hold back when it comes to his criticism of the regulators, alleging that “regulatory bodies want to show that they can shut us down.”
According to the founder, regulators hold the opinion that they can control the DeFi space, even though “the fact is that they can’t.”
“Even if I wanted to today, there is nothing I can do about yearn. I can’t shut it down, I can’t stop it, I can’t block it […] I can’t control anything,” Cronje said, but this “will not stop regulatory institutions from trying to make my life miserable.”
Meanwhile, the Securities and Exchange Commission (SEC) Chairman Gary Gensler said in an interview that his agency had “robust authorities” to regulate the crypto sector “broadly,” adding that the SEC is “going to use them.”
Acting Comptroller of the Currency Michael Hsu also said in a speech earlier this week that "It feels like we may be on the cusp of another [financial crises]" with crypto and DeFi.