Decentralized financing experts agree that cooperation is the key to building a framework that tackles the concerns of supervisors without undermining the potential of decentralized technologies.
Bybit Hack places Defi regulation debate in the spotlight
Following the Bybit Hack of the Lazarus Group, which is said to be the largest crypto robbery in history, the first industrial cooperation to block the outflow of more than $ 1.4 billion in stolen funds. However, disagreements emerged quickly, with various platforms, in particular decentralized, confronted with accusations of helping the hackers.
The allegations of complicity became louder as the value of the stolen digital assets increased. As reported by Bitcoin.com news and other points of sale, anger initially focused on Thorchain and later at OKX, a by Seychelles with a cryptocurrency exchange. Some critics argued that both platforms had not done enough to proactively thwart the hackers, who reportedly worked tirelessly to move the funds.
However, proponents have defended decentralized protocols, attempts to censor or change the underlying code to appease regulators as a betrayal of core principles. Others claim that supervisors are exaggerated and try to impose traditional financial regulations on a fundamentally different system.
In the meantime, while Thorchain is confronted with community refund, OKX, who recently obtained a license to work in the euro zone, has encountered more significant pressure. The license seems to have been used as a lever by European regulators to start an OKX investigation. The research followed that Bybit -Hackers used the app app of the Exchange Decentralized Exchange (DEX) to move some of the stolen funds, as reported by Bitcoin.com news.
After initially denying an investigation, OKX confirmed it effectively by announcing the suspension of his DEX aggregation -app on 17 March. The stock market stated that this was “extra upgrades to prevent further abuse.” OKX mentioned a problem with ‘incomplete labeling’ as the reason for the wrong identification of his Dex aggregator as the ‘trading point’.
Crypto Industry Security delays
According to the exchange, the DEX aggregator works as an “inherent” non-freestyle platform, which means that it does not contain customer assets. However, the suspension of OKX of the DEX-AGGregator on behalf of supervisors indicates a broader trend: Regulators are increasingly using existing frameworks or create new ones, such as markets such as markets in Crypto-assets Regulation (MICA) to exert more control over the crypto industry.
This step, together with actions by American authorities that are on the black list, a decentralized privacy instrument, it is said to show to what extent regulators are willing to act against decentralized technologies that are seen as facilitating illegal activities.
Such regulator campaign also emphasizes the crucial issue of balancing safety and compliance with the core principles of decentralization and resistance of censorship. As the Fallout of the Bybit -Hack has shown, not everyone in the Crypto community is relentless in their compliance with the decentralization -Mantra when important interests are involved.
To prevent future division, a solution is therefore needed for all stakeholders. Nanak Nihal Singh Khalsa, co-founder of Holonym, is of the opinion that this solution “does not require centralization or a harmful type of censorship”. However, Khalsa claims that due to the lack of recent security improvements by the industry, the legal intervention seems inevitable.
“Unfortunately, the industry has not been improved lately, so it is possible that supervisors will intervene and impose solutions such as traditional AML/KYC protocols. Unfortunately, this censorship and centralization would increase,” said the co-founder of Holonony.
Andrei Grachev, managing partner of Falcon Finance, proponents of cooperation between all stakeholders. He believes that supervisors, security experts and protocols must work together to establish decentralized risk reduction that protect users without jeopardizing the core principles of open financial systems.
In the meantime, a primary argument against allowing regulators to dictate events in decentralized finances (Defi) that suppresses innovation. In addition, proponents of anti-censorship insist that imposing regulations on the Defi-eco system could stimulate development of development. A security advisor at Apex Foundation, who asked for anonymity, argues that this is not necessarily true.
“External regulatory influence is not inherently problematic – the impact depends on coordination with the core values of a project. When stakeholders are correctly informed and governance structures effectively function, each project can independently evaluate whether compliance jerks,” said the security advisor.
To illustrate, the adviser points out the position of privacy -oriented services such as Protonmail and Tutanota against the coding regulations of the EU. After they have determined that certain legal requirements were “fundamentally” contradicted with their core mission, they chose to withdraw services.
In the meantime, the adviser argues that the industry currently has the possibility to demonstrate its ability to regulate, what it should use before restrictive measures are implemented.
The three experts agreed that cooperation is the key to building a framework that tackles the concerns of regulators without undermining the potential of decentralized technologies. They offered different opinions about achieving this, whereby the Apex Foundation adviser emphasized the importance of the structure of the cooperation framework. Khalsa, for his part, emphasized that the framework should concentrate on the safety of underlying protocols and portfolios.
