Regulating DeFi: Not All Protocols Are Created Equal

One should not underestimate the growth potential of the Decentralized finance industry. However, there are some concerns as to whether regulation is necessary and, if so, how it would affect the future DeFi industry. It is not unlikely to think regulation will be a tangible option but not necessarily a requirement. Following some recent developments in the decentralized finance section, the demand for regulation has become much more outspoken. Several protocols have come and gone – either due to rug pulls, thefts, hacks, etc. – and left investors and speculators without money. However, there are many protocols that do not suffer from such incidents, and they keep bringing value to their customers. Most people agree that some degree of regulation may be required. Many DeFi protocols do not maintain a non-custodial approach. More specifically, they will take control of user funds, and people have to trust these providers to conduct proper business etiquette. For instance, customer and company funds segregation would be a welcome requirement for such custodial providers. Although some protocols do this by default, it would be beneficial to see things improve.

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