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

[Lerikaweb]

Every ico or defi or any other startup must register as a legal company. They sell their tokens for real money which is stored at a bank. And any bank, even if it is a private company, must enclose the information about its clients to the government of the country where it is legally registered. So decentralization is a kind of illusion)))

[Shallow]

First there are very high potential DeFi projects today so imposing a regulation just because of some few scam projects won't work in my own opinion. The truth is, the good DeFi projects will speak for themselves and the scam ones will answer to a higher call. Remember, most major platforms in the crypto space today had private sale and ICO and when others were exiting scam they stood and continued their development; so same can be likened to the DeFi space. Investors are meant to do their best and invest in good projects but nowadays, they tend to invest after hype and that's where the problem always start from.
Furthermore, owing to the fact that DeFi stands for Decentralized Finance, it means that, on no account can it be regulated. You can hardly change the nature of a thing and still expect to be the same or offer the same level of services, thus should Defi be regulated for whatever reason, it will lead to the downfall of all DeFi projects and seriously no one will want that.

[DarkDays]

Imagine developers being held liable for creating and launching a "De-Fi" platform on the Blockchain.

I think that would be very difficult to implement given that the source code is transparent and available for anyone to see. So in this case the liability not only falls on the creators i.e. coders but users also as if something were to go wrong you could say that the users failed to do their due diligence. That's the blame has been shifted, but at the same time there will need to be some sort of party being responsible for this, and I can only see this happen if one organisation was to take 'control' over this and reshape it into a more centralised organisation. This again can be seen as problematic.

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.

I think the scale of 'DeFi' adds too much complexity, unlike ICOs/STO's where regulations were much easier to be added. This time is not so simple and I almost fear for what is going to be proposed as this is not a simple solution.

[jacafbiz]

I don' think DEFI platfrom has a whole can be regulated, what is likely to happen is that regulators can decided to go after the main developers and if they are successful this would spoil the party for the DEFI market. I think we will likely start seeing more anonymous developers now

[Princejebs]

DeFi is still a new trend of numerous projects without direction. The immense loss that has been accrued in the space of short time isn't healthy, hence necessary measures and action need to be taken to safe others.
Due to ignorance of UK citizens to crypto derivatives, the regulation body has ban its users from trading derivatives and futures. The same thing is happening to DeFi, many don't even understand anything about DeFi, it's always about fomo and the latest catch.
Regulation comes with limitations though, the outcome may not favour everyone.

[Traderbtcc]

I don't think DeFi platforms will ever become regulated by the government in the future, I don't just see any possibility of that happening, because these are decentralized platforms that can work on their own without being regulated by anyone, just like crypto currency , and about the scam DeFi platforms, well mate there are alot of scam DeFi projects right now although its not that much yet, lately I do see alot new DeFi projects coming up, selling their sh*t coins with no real use case,they are just using the magic "DeFi" word to lure investors.

[redsun114]

And how do they plan on doing that? Nobody can regulate DeFi, they are fully decentralized and the ones I know their team are anonymous. That aside, when something is said to be decentralized, there is no way that it can be regulated by the government. The government can only regulate things that are centralized.

We can use the old exchanges we have as an example: there are centralized exchanges and the ones that are decentralized. Example of the centralized is Coinbase and the government regulates it, and decentralized is LocalBitcoin, no one can regulate such.

[jerrison]

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.

The Idea behind decentralization is basically leaving the regulatory agenies and institutions in the dark as long as the technology is concerned. the space is controlled by the general public and they get to decide what they want and what stands. If they community of people in the blockchain space decides to have a uniform government aside the government of the world, they can not be stopped but there is no way for government to control what they can not be in control of. It logically defeats the tech itself.

[sayulita]

Every ico or defi or any other startup must register as a legal company. They sell their tokens for real money which is stored at a bank. And any bank, even if it is a private company, must enclose the information about its clients to the government of the country where it is legally registered. So decentralization is a kind of illusion)))

In this case the money is stored in the form of cryptocurrencies and as the name suggests that these exchanges are decentralized and there isn't any central authority that is holding your funds, so why they should provide any information about the transactions happening at their platform, this sounds like a really bad idea. There isn't any point in making the decentralized exchanges regulated as they only provide the exchange as a medium to do the trading in an anonymous manner where people shouldn't trust each other but have to trust the technology behind the system which is much better and the chances of getting scammed are reduced to nil.

[TopTort777]

There is no if. They will be regulated in the future, would get a bit different name, but the idea under it still will be DeFi. As soon as people will understand how sweet this DeFi pie is, they will try to take a piece of it. This always happens. At first no one cares (or cares, but have a strategic plan), but when it starts to generate huge money, it gets torn apart with rules, laws and etc.

[Arkann]

There is no if. They will be regulated in the future, would get a bit different name, but the idea under it still will be DeFi. As soon as people will understand how sweet this DeFi pie is, they will try to take a piece of it. This always happens. At first no one cares (or cares, but have a strategic plan), but when it starts to generate huge money, it gets torn apart with rules, laws and etc.

In any case, decentralized finance will first win its fate of the cryptocurrency market, attract sufficient investors and followers to their projects, thanks to which they will receive strong enough support, and later, in order to function legally and have legal protection and legalization, each user and investor will still be forced to provide your passport details. I believe that no government will allow such projects to exist without control as long as the current state structure exists. I believe that for a decentralized financial system there should be political Will, if not in every state, then at least in a separate country.

[max6575]

with customs as defi might reach of different stakes on consumption terms on plan the work with the regulation helps on improving with the legal status to helps as pupils have with confidence to spares of expense with the offers from developer.

[RealMalatesta]

Unfortunately they do not register as a legit company, not all of them. Obviously there are ones that register and I am keeping them out of this discussion but there are two type of companies that are dangerous. One that doesn't register at all, we do not know who they are and we do not know where they are based basically we have zero knowledge about who they are and what they are trying to do.

The second dangerous ones are less dangerous but they are still risky to begin with, they register at weird small countries so that they couldn't be tracked down, is that even more dangerous? Obviously it is but at the same time it is a good business decision to go places like Bahamas or whatever because you pay less taxes so we do not know if they do it for illegal reasons or just tax reasons.

[Abiky]

I don' think DEFI platfrom has a whole can be regulated, what is likely to happen is that regulators can decided to go after the main developers and if they are successful this would spoil the party for the DEFI market. I think we will likely start seeing more anonymous developers now

Governments won't be able to enforce regulations on "De-Fi" platforms because of their decentralized and open source nature. But they'll be able to go after developers whose identities have been revealed across cyberspace. In this regard, governments could hold developers of "De-Fi" platforms accountable for their actions. They can force developers to comply with KYC/AML and securities laws or face serious consequences. As you've said before, we might begin seeing more anonymous developers in order to keep the "De-Fi" industry growing. In this strange and bizarre world of crypto, anything can happen.

All in all, regulations will come as a result of scams taking place on the "De-Fi" industry. There's nothing we can do about this, since it's the government's job to protect people against malicious actors. As long as regulations are mild, there should be nothing to worry about. Otherwise, fierce or heavy-handed regulations will do more harm than good to the growth of the crypto/Blockchain industry in general. Just my opinion

[Drahzar]

i look positive on this opportunity because all the regulations of these tools could protect us, investors, from scams (especially what we faced in 2017 during ICO times)

[Drahzar]

i look positive on this opportunity because all the regulations of these tools could protect us, investors, from scams (especially what we faced in 2017 during ICO times)

that's for sure - regulation will help to save investor's money...  i try to check interesting defi/dex projects with good financial model and legal structure

yeah, besides just found a new stablecoin dex - xsigma, i'm interested exactly because they have credible founders, public company listed @nasdaq

[shinratensei_]

with customs as defi might reach of different stakes on consumption terms on plan the work with the regulation helps on improving with the legal status to helps as pupils have with confidence to spares of expense with the offers from developer.

The regulation will be making the scammer be so difficult to create the scam defi project. This will bring more security to the investors to invest in the defi platform. that can also be used to verify whether the defi is a legit defi project or not but the regulation will make defi becomes centralized as it must have followed all of the orders created by the regulators.
The defi can also help the regulators to collect the data too.

[bitcon]

Every ico or defi or any other startup must register as a legal company. They sell their tokens for real money which is stored at a bank. And any bank, even if it is a private company, must enclose the information about its clients to the government of the country where it is legally registered. So decentralization is a kind of illusion)))

DE-FI is a very interesting area of cryptocurrency. And it is interesting because it is decentralized and regulators cannot do anything, except to bring the project itself to justice. By the way, the decentralization of DE-FI both attracts huge interest from users and repels some people due to the development of fraud.

[uneng]

As long as these platforms continue profitable people will stay there. At this point regulations are not a question of if, but when. They are a security measure firstly due to terrorist activity. Furthermore it guarantees extra safety for investors, as the names, addresses and everything else behind the DeFi platform will be exposed.
From this perspective I see investors can have more confidence when investing on the platform, what can even increase the demand for such projects. On the other hand, if what really boosts crypto currency market is dirty money then regulations are going to kill not only DeFi, but every crypto decentralized project...

[Clement Kaliyar]

As long as these platforms continue profitable people will stay there. At this point regulations are not a question of if, but when. They are a security measure firstly due to terrorist activity. Furthermore it guarantees extra safety for investors, as the names, addresses and everything else behind the DeFi platform will be exposed.

I wonder how the regulators will find a solution for this decentralized finance, one thing is sure, the authorities will come hard on them and i do not think this trend will last for a long time. The hype had its time and it depends upon how much transparent things can be in the market. There might be good projects but what i generally see is pump and dump like we used to see when ICO started.