Crypto OG Erik Voorhees believes that DeFi has already solved the issue of regulatory clarity for altcoins

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

The crypto industry fears that all but the four cryptocurrencies listed on the newly launched EDX markets – BTC, ETH LTC and BCH – could potentially be banned from trading in the US

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 terms of securities.

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

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

The four tokens listed on the exchange drew a lot of interest over the following days, with BCH and Litecoin posting impressive gains.

DeFi is the solution

Many have called on the industry to band together and make a concerted effort to ensure altcoins are not left behind in the US

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

Voorhees said DeFi is inherently “permissionless,” meaning people who want to trade and own altcoins that aren’t listed on centralized exchanges can resort to decentralized protocols.

No clear regulation or approval is required for DeFi protocols to operate, and there is very little government can do other than make DeFi-related transactions illegal.

According to Voorhees:

“She [governments] can write all the laws they want. The logs still work… That’s immensely powerful.”

Bitcoin on-off ramp

One of the main shortcomings of DeFi protocols is the lack of a fiat entry and exit ramp with traditional banks, meaning that without a fiat connection, altcoins cannot be used for everyday transactions such as buying groceries.

Most people circumvent this problem by using centralized exchanges that have such on-off ramps, or a peer-to-peer market where supported cryptocurrencies can be exchanged.

Compared to DeFi, listings are limited on centralized exchanges like Coinbase and even Binance. The crypto industry fears that this selection could be further limited to just four cryptocurrencies.

However, Voorhees believes that this would not be a problem and would not hinder DeFi protocols or altcoins. He said the industry only needs a “single gateway to banking” to function, and that role could easily be filled by Bitcoin.

People are already converting unlisted cryptocurrencies into bitcoin, ethereum and stablecoins when intending to withdraw into fiat currencies, and this practice would be maintained in the US, albeit on a more limited scale

Voorhee’s arguments go back to the basis of why Bitcoin and DeFi were created in the first place – to give people economic choice.

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