One year after Biden's executive order on increased scrutiny and regulation of the crypto industry, there remains little clarity on which federal regulator will be tasked with the job. The SEC and CFTC both see crypto assets as their exclusive territories, but a principles-based regulatory approach is needed for the industry's development. The SEC defines most cryptocurrencies other than Bitcoin as securities, while the CFTC defines them as commodities.

The disparate and diverse nature of the DeFi industry does not make sense to describe as simply "securities". Ambiguously drafted or interpreted rules and regulations may stifle innovation and impact the position of the US as a global financial leader. The approach of the SEC has been in contrast to that of the CFTC, which is more concerned with guidance and governance.

Two ongoing legal cases involving Ripple and KuCoin will have consequences for the crypto industry, including DeFi. A clearer and more consistent principles-based regulatory approach is needed to attract traditional financial investment and create a fast and frictionless financial system that works for all.