DeFi needs risk-based regulatory models that understand its architecture and address illicit activity and consumer protection. Self-regulatory frameworks cultivate transparency and security in DeFiThe entire industry highly recommends implementing a self-regulatory framework that ensures continuous innovation while simultaneously ensuring consumer safety and financial transparency. Take the example of DeFi platforms that have taken a self-regulatory approach by implementing robust security measures, including transaction monitoring, wallet screening and implementing a blacklist mechanism that restricts a wallet of suspicion with illicit activity. Sound security measures would help DeFi projects monitor onchain activity and prevent system misuse.
Without clear regulations, however, the prevalent issue of “Ponzi-like schemes” can divert focus from effective innovation use cases to conjuring a “deceptive perception” of blockchain technology. Guidance and clarity from regulatory bodies can reduce significant risks for retail users.
Opinion by: Hedi Navazan, chief compliance officer at 1inchWeb3 needs a clear regulatory system that addresses innovation bottlenecks and user safety in decentralized finance (DeFi).
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Author / Journalist: Cointelegraph by Hedi Navazan
The story "The cost of innovation — Regulations are Web3’s greatest asset" has 871 words across 48 sentences, which will take approximately 4 - 8 minutes for the average person to read.
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