Regulators and DeFi proponents must address the hazards of DeFi before mainstream acceptance, Wai-Lum Kwok, senior executive director of authorisation and FinTech at ADGM’s Financial Services Regulatory Authority, said in an interview.
“Virtual assets have been a part of financial services for a long time, and we believe that DeFi will soon join that list.” Mr. Kwok, however, noted that “The traditional financial sector is now constrained when it comes to investing in DeFi.”
“How can traditional financial services organizations include DeFi into their services while still adhering to consumer duties to operate with due care and diligence?” He added further.
Because of its use of the blockchain, DeFi is seen as a more secure alternative to traditional financial intermediaries like brokers and banks.
Emergen Research expects the global DeFi platform market to reach $507.92 billion by 2028, with a compound annual growth rate of around 44%.
According to research published by blockchain analytics platform Chainalysis last month, illegal activities such as money laundering, market manipulation, and internet theft is a major concern.
The reduced level of illicit activity is a sign that market participants are more engaged in combating these dangers, which have the potential to cost users billions of dollars, the research added.
Although DeFi is still in its infancy, Mr. Kwok stated that the technology is being studied for its benefits and drawbacks.
Conclusion
Concluding his speech, Mr. Kwok said that, “A legal framework for DeFi that is both strong and practical for the sector is the ultimate goal.”
“We don’t pretend to know it all. In order for us to be confident in our beliefs, ideas, and policies, we need to consult industry experts,” he added further.
