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SEC Commissioner Hester Peirce Calls for ‘Legal Clarity and Freedom to Experiment’ for DeFi

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Saying that DeFi promises democratization, open access, transparency, predictability, and systemic resilience, Peirce mentioned the risks related to the industry. They include security vulnerabilities, scaling problems, and faux decentralization.

On Monday, US Securities and Exchange Commission (SEC) Commissioner Hester Peirce delivered a speech for the George Washington University Law School “Regulating the Digital Economy” conference. During the event, Peirce shared her vision on decentralized finance (DeFi), describing it as an alternative legacy financial system many are seeking right now. Besides, the SEC Commissioner said DeFi is “a very good test” for regulators and called for being “more proactive in embracing technology”.

Hester Peirce said:

“Decentralized finance will provide a very good test for our ability to regulate with an eye toward protecting the interests of investors and markets, not incumbents. The anti-Wall Street sentiments coursing through the market events of recent weeks and the growing realization of the power that private and public centralized entities wield in our lives have inspired some to call for throwing the legacy financial system out entirely. In its place, they would put decentralized finance (DeFi).”

Further, the SEC Commissioner compared DeFi with the legacy centralized financial system (“CeFi”). Saying that DeFi promises democratization, open access, transparency, predictability, and systemic resilience, Peirce mentioned the risks related to the industry. They include security vulnerabilities, scaling problems, and faux decentralization. Therefore, regulators need to “provide both legal clarity and the freedom to experiment so that DeFi can compete with CeFi to offer investors financial services.”

SEC Calls for More Precise Crypto and DeFi Regulations

Previously, Hester Peirce, known as ‘Crypto Mom’ due to her friendly attitude towards crypto, called the regulators for an urgent need for more precise cryptocurrency regulations. As Peirce explained, with more companies adopting the distributed ledger technology, new challenges for the SEC are appearing. In particular, legal issues result from removing third-party intermediaries in DeFi, such as banks and exchanges. SEC depends on these intermediaries, the lack of which in DeFi may be to blame for the numerous hacks and fraudulent activities in the space.

Speaking on the necessity of clearer crypto regulations, Hester Peirce noted they should be slow.

Earlier, the Commissioner said:

“Regulators are slow and there’s a reason we’re slow. We need to have [a] process in place so that we make sure when we’re changing rules people have notice that we’re thinking about changing a rule and they can comment.”

In addition, Hester Peirce believes that regulations and guidance should not limit which technologies companies can use. Such an approach would allow innovators to build a wide range of compliant tools and platforms.

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Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.



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Ripple Co-founder Argues Need for Bitcoin to Switch from Proof-of-Work (PoW)

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On Earth day, Chris Larsen in a blog post argued why he thinks Bitcoin needs to reconsider Proof-of-Work when validating transactions. As the oldest and the world’s most dominant crypto asset, its core technology remains largely unchanged.

The world is changing and there is an increasing need for renewable energy and more energy-efficient uses. Though financially revolutionary, Bitcoin has long been one of the highest power consumers. A recent study revealed that Bitcoin consumes more power than some countries, in light of this, Ripple co-founder Chris Larsen has pointed out that the Proof-of-Work (PoW) is no longer pertinent. The billionaire points out that this was also a concern for Hal Finney, one of the earliest Bitcoin adopters and only one of a few people who had contact with Satoshi Nakamoto the creator of Bitcoin.

In a blog post, Larsen pointed out several key issues with PoW. Primarily, CO2 emissions and consumption of energy. In recent years, miners have been switching to renewable sources of energy. Some have also argued that Bitcoin uses ‘trapped energy,’ energy that would have otherwise gone to waste. But as the co-founder notes, this is only part of the solution.

Should Bitcoin Re-consider PoW?

He draws a comparison to Ethereum which is currently in the process of switching from PoW to a new validation process referred to as Proof-of-Stake (PoS). Other major players that have already implemented this include Binance coin (BNB) with a market cap of over $80 billion. This is proven to be more energy-efficient and successfully adopted by 43% of the cryptocurrencies in the market.

But Larsen points out this is not the only solution and Bitcoin has. Another option could be Federated Consensus which is used on the XRP Ledger. In fact, the solution could be ‘something yet to be developed’.

“I would argue that such a change is critically important for Bitcoin to remain the world’s dominant cryptocurrency. PoW’s current energy demands and carbon footprint are already unsustainably high, with Bitcoin alone consuming an average of 132 TWh a year (equivalent to roughly 12 million U.S. homes), and releasing an estimated 63 million tons of CO2 annually”, added he.

Institutions Role

As Bitcoin continues to surge, energy consumption and CO2 will continue to rise, this should at least raise a concern to companies like Tesla who want to invest in the financial evolution and reduce the impact on climate change. “Consider Tesla’s recent investment in bitcoin, which resulted in an over $5,000 per bitcoin price increase. Incredibly, this almost certainly wiped out Tesla’s entire fleet’s annual CO2 savings,” wrote Larsen.

The co-founder’s comments are timely for institutions, miners, developers and even retail developers to get the community talking as the world celebrates world earth day.

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Kiguru is a fine writer with a preference for innovation, finance, and the convergence of the two. A firm adherent to the groundbreaking capability of cryptographic forms of money and the blockchain. When not in his office, he is tuned in to Nas, Eminem, and The Beatles.



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DOGE out of control? Social media and whales sway Dogecoin price action

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Dogecoin (DOGE) has been the talk of the crypto town in the month of April. On the first day of the month, it was trading in its usual $0.05 range. On April Fools’ day, Tesla CEO Elon Musk tweeted about the coin yet again. His tweet read, “SpaceX is going to put a literal Dogecoin on the literal moon” — SpaceX being the aerospace company that Musk also founded. Although the tweet was intended as a joke, it set the Shiba Inu-themed meme token on a rally like no other.

Within two hours, the price rose by more than 35% to a peak of $0.07 before cooling off temporarily but still holding on to its gains. The next spike in price came on April 14, with the value of a single token doubling within a single day to break the $0.10 mark. This led Musk to again turn his attention toward the coin, tweeting a picture of the famous painting by Spanish artist Joan Miró, saying “Doge barking at the moon.” This tweet, along with the rising social sentiment, pushed the price to a high of $0.45 on April 16.

Kristin Boggiano, president and co-founder of CrossTower — a digital assets exchange — gave several reasons behind the surge in a conversation with Cointelegraph: “First, Coinbase listing has generated interest and buzz about crypto in general. Second, the popular Reddit forum ‘r/Wallstreetbets’ changed their rules for a day to allow discussion of crypto, which included DOGE.”

The price surge took Dogecoin all the way up to ranking fifth in the top 10 cryptocurrencies by market capitalization. The market cap also briefly passed the $50-billion mark, which is a high figure for a coin that was conceived as a joke. At the time of writing, it has now slid down to rank seventh among the top 10, with a market capitalization of $36.45 billion. The price is also currently in correction trading at $0.28.

Eric Berman, senior legal editor, U.S. finance at Thomson Reuters, commented to Cointelegraph regarding Dogecoin’s retail demand: “The sentiment seems to be: Bitcoin is for the wealthy, Ethereum for the middle class, and Dogecoin is for the people.”

Doge Day marks a historical moment

Dogecoin fans celebrated April 20 as Doge Day with a symbolic push of the coin’s price to $0.420. It also wasn’t lost on the community that 4/20 was also associated with the marijuana day. Even though it was just for a brief moment, the community did seemingly come together to push the price of DOGE to its all-time high.

The rise in retail interest in Dogecoin even led to a system outage in Robinhood’s trading app due to the overload of orders. To make the coin more accessible to retail investors, on April 21, Robinhood even reduced the minimum order size of DOGE from 10 to 1. This entails that investors can now stack DOGE one coin at a time.

Joshua Frank, co-founder and CEO of The TIE — a social media analytics platform for cryptocurrencies — revealed that the social media sentiment for Dogecoin still holds strong, telling Cointelegraph:

“Long-term sentiment for DOGE went outside the standard deviation and posted a record 139 sentiment score on Jan. 28, 2021, after Redditors from r/SatoshiStreetBets discussed making Dogecoin the cryptocurrency equivalent of GameStop. Sentiment still holds strong at 72, and tweets from Elon Musk about Dogecoin on April 14 have helped fuel the surge.”

Since Dogecoin was founded in 2013, it’s essentially one of the older coins in the cryptosphere. The listing of the token on exchanges like Binance and OKEx has strengthened its presence in the cryptocurrency community with better access to liquidity, thus creating more stable trading flows and interest in coin accumulation.

OKCoin announced on Doge Day that the exchange would be listing the token in the last week of April. Speaking further about DOGE, Jason Lau, CEO of OKCoin, told Cointelegraph:

“DOGE is relatively well suited for payments. It’s extremely fast and efficient — transactions cost less than a cent. Though it has less nodes than others, it is secured by proof-of-work and has never had any security issues.”

DOGE is currently used as a payment method for merchandise of NBA franchise Dallas Mavericks, which is owned by renowned investor Mark Cuban. He pointed out on Twitter that merchandise sales have grown 550% since the club announced that it would be accepting payments in Dogecoin. He also stated that the sports team will not be selling any of its accumulated Dogecoin from the sales and will be hodling it for the long term.

However, the sustainability of this rise in adoption is yet to be seen. Lau further said: “It’s important to point out that the Dogecoin codebase has not had any update in years and is not actively maintained.”

Boggiano further said that for some traders, the fact that Dogecoin was created as a joke becomes a fun experiment to see if they can gamble against other traders and come out ahead, thus essentially being used as a competitive tool:

“It may also be the crypto community ‘reclaiming’ their story. For people in the crypto community, we know that DOGE was created as a joke. It was created to mock Bitcoin. However, it’s turning out that Bitcoin is a legitimate asset class. Therefore, this could be a means to redefine the dialogue and understanding of cryptocurrencies in general.”

Could this be yet another pump and dump?

Dogecoin has been an instrument for pump and dump schemes in the past, so could this instance be yet another example of such activity? DOGE is a hugely inflationary coin by design without a decided maximum supply, which entails that there are 5 billion new coins entering the circulating supply each year. Due to the high supply, there is always an endless downward pressure on the token.

On the possibilities of this being another instance of a pump-and-dump scenario, Frank further stated that the rally has been controlled by a single entity that has accumulated at least “$1.3 billion worth of Dogecoin and abused the futures market by baiting shorts into creating a negative funding cycle that led to a derivatives blowout in excess of $760 million of liquidations.”

According to Twitter user Lightcrypto, the player marked up the price of the token many times while feeding into the social media narrative surrounding the meme token. Apparently, the player liquidated their spot holdings, creating over $760 million worth of liquidations in the derivatives market. On the contrary, Berman opined further on the surge in interest:

“The Dogecoin phenomenon seems little bit reminiscent of the Reddit/GameStop conversation from a couple of weeks back. While its popularity could be attributable in part to the recent Coinbase IPO, most cryptos would be experiencing a similar bounce. […] People [who] may feel like they missed out on the upside of Bitcoin are thinking that perhaps this is their shot.”

Although the price of Dogecoin is currently in a decline in what could be seen as a market-wide correction, it’s becoming clear that the token has found a use beyond the meme-coin status and is now seeing real growth within the cryptocurrency ecosystem.

At its height, its market capitalization even went past long-existing multi-national companies such as Barclays and Ford. Speaking on the sustainability of the coin, Lau further stated: “I would not underestimate DOGE’s staying power. For many, it was the first crypto they owned or the first one they heard of. Plus, it’s one of the few tokens that have deeply penetrated beyond the crypto community.”