DeFi derivatives could be illegal, CFTC commissioner says D | NFT News

DeFi derivatives could be illegal, CFTC commissioner says

DeFi markets for derivatives - i.e., futures contracts - could be illegal under the Commodity Exchange Act, a U.S. law that regulates such products and requires that they be traded only in regulated contract markets (DCM), Commodity Futures Trading Commission (CFTC) Commissioner Dan Berkowitz said in a speech at the Asset Management Forum.

In addition to legality, Berkowitz also expressed concern that DeFi markets that trade derivatives may not have the same protections as their centralized counterparts. He said regulated financial institutions are legally obligated to protect client funds, and intermediaries exist to ensure that clients don't lose their money if one entity in the market collapses.