What if "De-Fi" platforms become regulated in the future?

[Abiky]

Just like the ICO boom of 2017, the "De-Fi" space seems to be heading towards an ever-rising hype cycle. It shouldn't be long enough before scams start "kicking in", making governments regulate the space in their entirety. If they impose heavy-handed regulations like they did in ICO's early days, "De-Fi" might no longer be the same.  Imagine developers being held liable for creating and launching a "De-Fi" platform on the Blockchain. The growth of the industry will stifle because of fierce regulations from mainstream governments. After what happened with ICOs, new denominations have emerged (namely STOs and IEOs). These new kind of ICOs have built-in mechanisms to comply with government's regulations such as seizure of assets and more. Something similar might happen with "De-Fi" if governments decide to start cracking down on the entire industry.

What do you think the outcome of "De-Fi" regulation will be? Will governments be successful at the task like they did with ICOs? Or not? Your input will be greatly appreciated.

[Marckolind]

What part of "DE" in DEFI don't you understand? No offense, lol.

Decentralized = No one can control, or regulate anything.

"DEFI" is used as a buzzword these days to lure suckers in to these crazy PnD scams. Want a real and UNIQUE DEFI project? Do some research on XSN.

XSN is solving the scalability issue on BTC + ETH. Making transactions pretty much INSTANT, and feeless via off chain transaction on a 2nd layer.

There is more info about the whole project in this thread:
https://bitcointalk.org/index.php?topic=5272923.new

[akhjob]

What do you think the outcome of "De-Fi" regulation will be? Will governments be successful at the task like they did with ICOs? Or not? Your input will be greatly appreciated.

I think if the blind DeFi craze continues like this, Governments would most probably try to regulate them as they did with the ICOs. As most of the DeFi projects work on a governance protocol, the Government can successfully regulate them by pressurising those who are capable of modifying the governance protocol which the DeFi projects rely on. 

[bigcash2011]

This may effect the business of some defi projects especially those that will fall under the jurisdiction of the regulator that comes up with these rules. As we have seen in case of Dexes, only some have applied KYC etc to make them compliant while most still do not require that, I think same will be the case for DeFi projects, only those projects will call for these things where there will be no option other than being compliant with regulator.

[nicecrypto]

With the rate at which Defi is going, the government might actually step in sooner than expected. Everything is happening so fast and that can actually give scammers an opportunity to feed on the innocent using Defi as a medium and if this should happen we will have no choice but to open the door to government interference.

Exactly bro, going by the number of Defi that are coming up every time in the market it won't be a surprise to see the government want to some how regulate it but in another thought I don't think that will be possible since it is decentralize and can not be in control of government.

[optimisticcm]

They should be regulated like every business is being regulated where big money is involved and this should not be done to control or tax the projects but simply to safegaurd the investors and common people who will be using defi services in the future, regulated defis can give huge boost and then defis can be mass adopted by the public with peace of mind.

[jrrsparkles]

Just like the ICO boom of 2017, the "De-Fi" space seems to be heading towards an ever-rising hype cycle. It shouldn't be long enough before scams start "kicking in", making governments regulate the space in their entirety. If they impose heavy-handed regulations like they did in ICO's early days, "De-Fi" might no longer be the same.  Imagine developers being held liable for creating and launching a "De-Fi" platform on the Blockchain. The growth of the industry will stifle because of fierce regulations from mainstream governments. After what happened with ICOs, new denominations have emerged (namely STOs and IEOs). These new kind of ICOs have built-in mechanisms to comply with government's regulations such as seizure of assets and more. Something similar might happen with "De-Fi" if governments decide to start cracking down on the entire industry.

What do you think the outcome of "De-Fi" regulation will be? Will governments be successful at the task like they did with ICOs? Or not? Your input will be greatly appreciated.

Before the regulations comes for the Defi projects I am sure that defi will become no value market so there will be no use of such regulations.In case if people found Defi as a revolutionary thing and not dumping the tokens even if the value are falling then the regulations should be needed but as an investors view they will just cash it out when the time comes and wait for the new hype.

[prehisto]

I seriously doubt that they can get regulated. As I understand those platforms are self sustainable, noone does not need to oversee them in ordr them to work ,this is why they are very attractive. but if wee look from customers side, someone should verufy that  this or that is real defi ad will not take your money.

[forexandcryptoauditor]

Many governments are watching this space closely. Not because of people getting scammed, but because of the ability to generate huge erevenue out of it, governments my control or rugulate DeFi projects especially. This is always in favor of countries to impose taxes on cryptocurrencies.

[btc_angela]

What do you think the outcome of "De-Fi" regulation will be? Will governments be successful at the task like they did with ICOs? Or not? Your input will be greatly appreciated.

Successful or not, if some government authorities like SEC gets their hands on DEFI then definitely, it will be the end. It is supposedly "Decentralised", so if there are regulations and if governments are going to be involved, I would say that investors are going to stay away from it, specially of SEC are going to file cases after cases on the project itself, then it will simply lost it's luster from investors.

[CaVO32]

What do you think the outcome of "De-Fi" regulation will be? Will governments be successful at the task like they did with ICOs? Or not? Your input will be greatly appreciated.

Successful or not, if some government authorities like SEC gets their hands on DEFI then definitely, it will be the end. It is supposedly "Decentralised", so if there are regulations and if governments are going to be involved, I would say that investors are going to stay away from it, specially of SEC are going to file cases after cases on the project itself, then it will simply lost it's luster from investors.

If there will be some type of governance or regulation over DeFi projects, then I don't think they can be called Decentralised anymore. It will be CeFi = Centralized Finance. What we can do as a user of this platform, is just to be responsible in joining these projects. As we are free in choosing the project we want to invest with, we should do our part not to be screwed by lame projects. The concept of DeFi is really significant as we can transact anywhere in the world without so much bureaucracy. However, it depends on the project if they are offering legit services. This is for us to assess which platform is legit or not.

[Coin-Behind-You]

It is impossible for DeFi to be regulated because legally, Decentralized is a violation so it cannot be regulated, and I think it's better not to be regulated. And it is better to focus regulation on the use of clearer currencies such as bitcoin and other coins because that is more important for the future of cryptocurrency.

[GreatArkansas]

It is impossible for DeFi to be regulated because legally, Decentralized is a violation so it cannot be regulated, and I think it's better not to be regulated. (....)

You got some point. Even just cryptocurrency itself it's still difficult for some countries then this DeFi thing can be regulated.
But we all know that DeFi is really useful, a really great help for the finance. But there are still some cons on it, not all are only positive effects for using DeFi. Some people also using DeFi just to scam or take advantange on other people, that's why it's also one of the reason why DeFi is impossible to be regulated.

[Phoenix_PROG]

What do you think the outcome of "De-Fi" regulation will be? Will governments be successful at the task like they did with ICOs? Or not? Your input will be greatly appreciated.

I think if the blind DeFi craze continues like this, Governments would most probably try to regulate them as they did with the ICOs. As most of the DeFi projects work on a governance protocol, the Government can successfully regulate them by pressurising those who are capable of modifying the governance protocol which the DeFi projects rely on. 

It's a good wish but it's never going to happen because it's decentralized, how do you expect government to intervene on this one? ICO is hundred percent different from DeFi, investors needs to safe themselves, are investors that stupid that governments is the only one that can safe them? So annoying

[cryptoaddictchie]

It is impossible for DeFi to be regulated because legally, Decentralized is a violation so it cannot be regulated, and I think it's better not to be regulated. And it is better to focus regulation on the use of clearer currencies such as bitcoin and other coins because that is more important for the future of cryptocurrency.

Actually agreed. But I doubt there are some bitcoiners dont want to make bitcoin to be regulated, I guess everyone who are into crypto dont want too. Yes adoption should be expanded and the fear of people on losing money cause of the idea that no one can control the value of bitcoin. Well thats a major play at hand. True decentralized with a greater risk. If defi will be become regulated then, say good bye to those scam projects that keep on rugging. Youll be all audited prior to launch.

[elda34b]

It will probably just around "legal or illegal to use", doubt it if it's more than that like regulating the number of coins invested since that's nearly impossible unless they control the smart contract. Not to mention if everyone start using peer-to-peer network, then anyone can use it regardless of the legal status.

What's more important is education so the so called "investors" don't get fucked up due to their stupidity, just like recently when they buy food tokens like a maniac.

[Abiky]

Successful or not, if some government authorities like SEC gets their hands on DEFI then definitely, it will be the end. It is supposedly "Decentralised", so if there are regulations and if governments are going to be involved, I would say that investors are going to stay away from it, specially of SEC are going to file cases after cases on the project itself, then it will simply lost it's luster from investors.

Agree. Based on previous events, the SEC does more harm to the crypto/Blockchain industry than good. Fierce government regulations will only scare off investors from the market. Consider what happened to the ICO industry once governments started to crack down on them. It's virtually non-existent, as everything shifted to STOs (Security Token Offerings) and IEOs (Initial Exchange Offerings) which enforce KYC/AML measures. If the trend continues, "De-Fi" platforms may be required to collect personally identifiable information for the government's own benefit. Smart contracts may be decentralized, but websites hosting them are not. A "De-Fi" platform creator could simply create a website that won't allow people to perform any actions unless their identity is validated. Only those who are tech-savvy enough and knowledgeable about crypto/Blockchain tech, will bypass this by interacting with the smart contract directly on the Blockchain.

Nonetheless, it's evident that every hype cycle brings massive regulations from mainstream governments. After all, they want a "piece of the pie". Their excuse is to prevent scams, abuse, and money laundering. But we all know governments' hidden intentions. They'd want to stay in control over people's money no matter what. And "De-Fi" goes against this since it's "banking for the unbanked". Ultimately, people will decide whenever they'd want to continue supporting "De-Fi" platforms or get out of them ASAP due to heavy-handed regulations imposed by the government. Let's hope all goes well for the sake of "De-Fi"'s growth in the mainstream world. Just my opinion

[qwizzie]

What part of "DE" in DEFI don't you understand? No offense, lol.

Decentralized = No one can control, or regulate anything.

How decentralized is that De in DeFi though, when people host them on centralized servers ?

See

De-Fi apps are NOT 100% decentralized
https://bitcointalk.org/index.php?topic=5272080.0

Not to mention the fact that having a lot of DeFi tokens projects getting dependend on one single blockchain (one that also happens to have
scaling issues, security issues and high fees issues), can hardly be considered decentralized to begin with.    

[Ozero]

In my opinion, DeFi cannot be regulated by governments. DeFi projects are civil transactions that are concluded and executed automatically through smart contracts. Such contracts, upon the occurrence of the conditions specified in them, are executed without the possible intervention of a third party, and this is precisely the main advantage of smart contracts. The blockchain technology used here does not allow anyone, including governments, to intervene and regulate such contracts.

[shoreno]

scams already started long time ago for defi but the rates of the scams were still low  , thats why theres no regulations that happened yet but lets wait a while  and see if scams continues to grow , maybe thats the right time that government starts making a move but is that really possible ? to regulate the defi ? it could be possible to ico because ico werent destined to be decentralized but defi is known to be decentralized , thats why its called defi or decentralized finance .