Decentralized Finance (Defi) protocols will survive the government and business efforts to impose traditional financial regulations designed to create a walled garden of permitted digital systems, according to Will Reeves, CEO and co -founder of Bitcoin (BTC) rewarding company.
Reeves told Cointelegraph that regulatory proposals that require Defi protocols to enter biometric identity controls within smart contracts, or other comparable traditional financial (trandfi) regulations, will be counterproductive, just like efforts to manage the distribution of information on the internet.
Policy proposals to perform identity controls in digital asset systems in strengthening the American leadership of the White House in the report of digital financial technology. Source: The White House
He also warned that governments and older financial institutions will use TradeFi stimuli to give people permission through traditional investment vehicles such as Exchange Trade funds (ETFs), which have advantages compared to crypto directly, including use as collateral for loans. He added:
“This is just a chapter that will lead to an inevitable victory for these open networks. After a while they will win, but along the way you will see rules and things that are meant to postpone progress.”
Maranded financial institutions push regulations to slow down innovation, while positioning themselves to enter the crypto sector in the coming decade, Reeves told Cointelegraph.
Despite this pressure, the protection of open-source software developers against legal liability continues to be the greatest priority for protecting permissionless financial protocols against centralization and scope of the regulations, he said.
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Financial institutions and governments enter the crypto world
While older financial institutions continue to increase their presence in crypto and demand a stricter government regulation on the sector, the proponents of privacy and financial sovereignty ensure that increased control could undermine the core principles of crypto and Defi.
Defi protocols promise to democratize finances and to bank unique, so that someone in the world with a mobile phone and an internet connection can shift value and risk via an open, worldwide financial system.
The forcing of reference controls issued by the government or the imposition of other Know-Your-Customer (KYC) requirements on Defi-Protocols undermines permissionless access, decentralization and increases financial supervision risks, critics say.
These risks would also not distinguish crypto and Defi from the older financial system that they had to replace, claim critics of this policy.
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