DeFining The American Spirit, SEC Commissioner Hester M. Peirce, Washington D.C., June 9, 2025

Thank you, Chairman Atkins, Commissioner Crenshaw, and Commissioner Uyeda, and thank you all for joining us in-person or online for the final afternoon of the Crypto Task Force’s Spring Sprint roundtable series: “DeFi and the American Spirit.”

Thank you especially to our moderator, Troy Paredes, who is returning after his excellent performance at our first roundtable back in March. Troy, we are grateful to have you here again as we wrap up. I also appreciate today’s panelists for being part of the discussion.

Over the past four months, the Task Force has held roundtables on security status, trading, tokenization, and custody.[1] These roundtables have provided invaluable input to the Commission, the Task Force, and the rest of the Commission staff—input that has informed our views and improved our efforts. The Task Force, which hit the ground running in a sprint of roundtables, intends to keep running the clarity marathon, and the perspectives of roundtable participants will help determine the course.

Our final roundtable is on DeFi, or decentralized finance. You may ask: What business does the SEC have in talking about regulating DeFi? Absolutely none is a reasonable answer, so with that, we will wrap up this roundtable: Thank you everyone for attending! OK, not so fast. Life is not that simple. Even getting to no regulation requires some talking.

What is DeFi? Bitcoin is “decentralized finance,” but it may not be what first comes to mind when we think of DeFi. Google says DeFi is “a blockchain-based financial system that aims to replace traditional financial institutions with peer-to-peer transactions and smart contracts.”[2] DeFi brings to mind decentralized networks, which enable people to trade tokens and derivatives, engage in lending, or participate in prediction markets. Although sometimes referred to as DeFi “platforms,” DeFi is not a place people go to access services that someone else provides and controls; it is software code that people use to engage in the activity of transacting without a centralized intermediary. To channel one of today’s panelists, I do not go to a decentralized exchange; I make a decentralized exchange.[3]

DeFi defies our traditional, permissioned world of intermediaries. It enables a person to engage with her peers through a protocol that is open to everybody on the same transparent terms: no need to get consent from any centralized gatekeeper. At its core, DeFi, which blockchain technology enables, is about the freedom to transact with your peers without permission, interference, or intermediation. And that is why DeFi resonates so deeply with the American spirit.

Also resonant with the American spirit is the ability of people to publish written material without permission. Code is protected speech. Because the First Amendment protects someone who writes a DeFi software protocol and publishes it, the SEC has no authority to demand pre-publication approval rights even for code that could be used to exchange securities. The SEC must not infringe on First Amendment rights by regulating someone who merely publishes code on the basis that others use that code to carry out activity that the SEC has traditionally regulated. If somebody else subsequently violates the law using the software protocol, the user—not the developer of the software—should face the music.

But sometimes the writer of a protocol used to exchange securities does more than merely publish it. She also might operate, administer, or maintain a platform through which the code can be accessed and that takes custody of client assets or makes execution decisions for clients. In this and other instances, the coder or her platform might be subject to regulation for that conduct. If that conduct relates to securities, the SEC might have a role to play.[4]

Centralized entities that use DeFi protocols that someone else wrote to serve clients do not get a regulatory pass either. Nor can centralized entities avoid regulation by hiding behind a “DeFi” label; that is DINO, or DeFi-In-Name-Only.[5] With centralized entities comes the potential for fraud, conflicts of interest, principal-agent problems, information asymmetries, and other issues common in the traditional finance world—all the issues DeFi is designed to address. The SEC’s efforts are best spent protecting investors, not from their own use of open-source software code to engage in transactions with their peers, nor from writers of such code, but from providers of financial services.

I hope that today’s discussion will help us ensure that SEC regulation is able to reach activities and entities properly within its ambit regardless of what label they bear, without prohibiting the exercise of individuals’ rights to publish code and interact with that code. I now will hand it off to Troy. Thank you all for being here, and I look forward to the discussion.