On the issue of DeFi regulation, I recently held a roundtable with TRM Labs-Ripple with the goal of delving into the challenges and opportunities lawmakers will face in trying to regulate DeFi. Among the participants was Ripple CEO Monica Long, who focused on the need for collaboration to ensure that innovation is responsible, to deal with risks and ensure consumers.
Boundarylessness poses a notable challenge to DeFi, as the lack of boundaries can be exploited to engage in a practice known as regulatory arbitrage. Increased sharing of activities between jurisdictions was considered an important aspect that would promote increased levels of transparency while at the same time enhancing the ability of regulatory bodies to develop more effective standardization frameworks.
The roundtable also touched on the concept of compliance by design, an emerging idea that integrates compliance requirements directly into DeFi protocols through smart contracts. This can reduce the burden on regulators and save costs at the same time, promoting efficient financial products for users.
Overall, the roundtable emphasized the need for a more collaborative approach and a “compliance-first mindset” in defining the future of DeFi regulation.
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