The World Economic Forum (WEF) has published a whitepaper on DeFi (Decentralized Finance) for policymakers this week.
With DeFi being a gray area in the crypto-asset industry with few clear regulations, a policy paper from the WEF is welcome as a guideline for regulators to follow and for DApp creators to understand what shapes compliance in the subsector may take in the future.
The whitepaper looks at the nature of DeFi, the myriad of risks in the space and potential policy approaches.
Within the policy approaches laid out in the whitepaper, the authors consider; specialized regulatory units, incentivizing information flow, regulatory sandboxes, clarifying easy cases and coordinating government action.
The paper acknowledges in its conclusion that “DeFi represents a distinct and potentially significant development, both within the landscape of blockchain and of financial services more generally”.
DeFi is an exciting evolution in crypto and evens the field of yield with both financial institutions and crypto native companies deploying capital into the same pools.