Ripple’s recent insights report highlights compliance as a pivotal aspect for the future of decentralized finance (DeFi).
The collaboration with TRM Labs and the discussions at the Elevandi Insights Forum emphasized the necessity of integrating compliance protocols into smart contracts and establishing common definitions for DeFi.
Regulatory Challenges and Solutions
Experts at the roundtable recognized the regulatory challenges posed by the borderless nature of DeFi. They discussed the need for enhancing data exchange among regulatory regimes and adopting a “compliance by design” approach to address these challenges.
Initiatives by leading regulatory bodies like the International Organization of Securities Commissions (IOSCO) and the Monetary Authority of Singapore (MAS) signal progress in this area. This is given MAS’s stance on spot bitcoin ETF in Singapore.
The Commodity Futures Trading Commission’s (CFTC) Decentralized Finance research shows that even countries without well-established cryptocurrency legal frameworks—like the United States—are making progress in this area.
A subcommittee of the Commodity Futures Trading Commission, last month in a meeting, voted to propose recommendations for the industry towards policy making for the DeFi sector. The goal was to ensure that regulators and industry stakeholders stay updated with the main idea being the need for collaborative efforts between the government and industry.
Ripple Projects a Breakout Year for DeFi
With increasing tokenization of real-world assets and growing mainstream acceptance of blockchain and cryptocurrency, 2024 is poised to be a breakout year for DeFi.
Recently, Algotech (ALGT), had analysts buzzing with interest and attention after raising an impressive $1.1 million during its seed sale. The DeFi token gained recognition as one of the top altcoins to look out for in 2024.
Ripple President, Monica Long sees this momentum as an opportunity for pioneering compliance solutions in DeFi, potentially making it the most significant breakthrough of the year and expanding the use of blockchain in finance.
Although it is still in its infancy, Emergen Research’s analysis projects that the decentralized finance sector will grow at a rapid pace and reach USD $601 billion in 2032. By utilizing blockchain solutions for finance, this sector has the potential to greatly increase financial inclusion and improve market efficiencies.