Crypto OG Erik Voorhees thinks DeFi has already solved the regulatory clarity issue for altcoins [Advance Cash ]

Crypto Og Erik Voorhees Thinks Defi Has Already Solved The Regulatory Clarity Issue For Altcoins

Erik Voorhees, founder of Shapeshift and longtime Bitcoin advocate believes that decentralized finance (DeFi) has already solved the problem of regulatory clarity prohibiting people from owning or trading a majority of cryptocurrencies.

The crypto industry is concerned that all cryptocurrencies other than the four listed on the newly launched EDX markets – BTC, ETH LTC and BCH – could potentially be banned from trading in the United States.

The industry fears that the listing of EDX is an echo of regulatory sentiment and a precursor to the delineation between these four and all other cryptocurrencies in regards to the latter being securities.

Bitcoin, Ethereum, Litecoin, and Bitcoin Cash are the only four cryptocurrencies that regulators have publicly admitted to not being securities. Meanwhile, SEC Chairman Gary Gensler has repeatedly stated that all other cryptocurrencies are considered securities by the regulator for all intents and purposes.

EDX is backed by legacy financial giants like Citadel Securities, which has further stoked fears that Americans can only trade these four cryptocurrencies on exchanges controlled by Wall Street due to regulatory restrictions.

All four publicly traded tokens attracted massive interest in the days that followed, with BCH and Litecoin posting impressive gains.

DeFi is the solution

Many have urged the industry to come together and make a concerted effort to ensure that altcoins are not left behind in the United States.

However, Voorhees said this is a problem that already has a solution in the form of DeFi.

Voorhees said DeFi is inherently "permissionless," meaning that if people want to trade and own altcoins that aren't listed on centralized exchanges, they can turn to decentralized protocols.

DeFi protocols do not need regulatory clarity or authorization to operate and there is very little governments can do to interfere other than making DeFi-related transactions illegal.

According to Voorhees:

"They [governments] can write whatever laws they want. The protocols continue to work despite everything... It's extremely powerful.

Bitcoin on-off ramp

One of the main shortcomings of DeFi protocols is the lack of a fiat on-ramp with traditional banks, which means altcoins without a fiat connection cannot be used in day-to-day transactions like buying e-commerce products. grocery store.

Most people get around this problem by using centralized exchanges that have such on-ramps or a peer-to-peer marketplace where supported cryptocurrencies can be traded.

Compared to DeFi, listings are limited on centralized exchanges like Coinbase and even Binance. The crypto industry fears that these choices are still limited to just four cryptocurrencies.

However, Voorhees believes this would not be a problem and would not hamper DeFi protocols or altcoins. He said the industry only needs a “one-stop bank” to function, and that role could easily be filled by Bitcoin.

People are already converting unlisted cryptocurrencies into Bitcoin, Ethereum and stablecoins when they intend to cash in fiat and this practice would continue, albeit in a more limited way, in the United States.

Voorhees' arguments go back to why Bitcoin and DeFi were created in the first place – to give people the freedom of economic choice.

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