Decentralized finance has a lot of buzz but it is a long way from establishing itself in the U.S. financial system in a meaningful way.

That was the consensus of a panel of exchange CEOs Wednesday at FIA Expo in Chicago. 

The stakes of the debate are high, as under ‘defi’, transactions automatically execute via smart contracts on the blockchain, effectively disintermediating exchanges and other central financial intermediaries such as brokerage firms. 

Jeff Sprecher, CEO of Intercontinental Exchange, noted that defi is mostly happening outside the U.S., as the legal framework is not conducive to it taking root. 

“Either our body of laws has to change to accommodate defi innovations, or defi innovations will have to figure out how to morph into something that fits in our laws,” Sprecher said. 

Data is an advantage for incumbents. “If you want to try to decentralize data, you’re playing in a big league,” Sprecher said. “Given the scale of what we do and that we have a 30-year head start, we’re not going to be disintermediated easily.”

Ed Tilly, CEO of Cboe Global Markets, said defi represents technological disruption, but the technology and the disruption need to be considered separately. Disruption from defi may not be a positive disruption, because end users will not see the fairness and transparency that a centralized marketplace can provide.

Some defi applications may have an end-around to launch. “Defi may hide under gambling regulations,” said Terry Duffy, CEO of CME Group. “They can make some of these products fit under some of the laws that allow gambling today. This would have zero consumer protection.”

The exchange CEOs were more constructive on digital assets.

“We think this space has legs and we want to be a part of it,” Sprecher said. He noted that the current media coverage around crypto is almost all around price volatility rather than the technology and efficacy of the product — this should change as the market matures.  

Cboe pulled back from its initial foray into crypto in 2017, but the exchange operator returned in a big way last month with its purchase of digital asset exchange ErisX.  

“We thought the ecosystem would have evolved a bit quicker” after 2017, Tilly said. But now, it is clear that “crypto is not going away.”

“We think with ErisX we have a regulated, transparent and fair market that aligns closest with our business,” Tilly continued. “It’s time for the next investor to have that same platform.

The asset class is different but the experience is the same” as with traditional securities, he added.

Cryptocurrencies will not replace fiat currencies anytime soon, at least for G20 nations with developed economies, Duffy said. But crypto “is going to continue to be a part of the fabric of finance,” he said. 

“The bright shining object is the $64k bitcoin, which is so fun to watch,” Duffy added. “But we’re going to see price become less relevant and the product will become more relevant.”