Decentralized Finance (DEFI) and Regulatory Challenges


Authors : Munisakhon Makhamadkhujaeva

Volume/Issue : Volume 8 - 2023, Issue 9 - September

Google Scholar : https://tinyurl.com/mukcawwm

Scribd : https://tinyurl.com/4yj3y5xh

DOI : https://doi.org/10.5281/zenodo.10100626

Decentralized finance (DeFi) built on blockchain technology has introduced groundbreaking innovation into the financial services ecosystem, but also poses novel risks related to money laundering, investor protection and systemic stability. This paper examines the nascent DeFi industry’s complex relationship with existing financial regulations through an international comparative analysis. DeFi's peer-to-peer transactional architecture using smart contracts falls outside the regulatory perimeter crafted around centralized intermediaries. While some jurisdictions have banned DeFi platforms, blanket prohibitions risk stifling beneficial innovation. More tailored governance solutions are required to address risks as DeFi evolves. Regulators worldwide are exploring strategies including relationally regulating influential platform developers, setting codes of conduct for open-source protocols, and embracing "RegTech" solutions harnessing blockchain data analytics. Evidence-based policy reforms should balance fostering DeFi innovation with addressing associated public interest concerns through coordinated international approaches. With astute regulatory modernization, DeFi's immense potential can be harnessed to expand financial access and efficiency equitably.

Keywords : Decentralized finance, DeFi, crypto-assets, blockchain, financial regulation, governance.

CALL FOR PAPERS


Paper Submission Last Date
31 - December - 2023

Paper Review Notification
In 1-2 Days

Paper Publishing
In 2-3 Days

Video Explanation for Published paper

Never miss an update from Papermashup

Get notified about the latest tutorials and downloads.

Subscribe by Email

Get alerts directly into your inbox after each post and stay updated.
Subscribe
OR

Subscribe by RSS

Add our RSS to your feedreader to get regular updates from us.
Subscribe