Opinion: DeFi cannot be fully regulated

DeFi requires a regulatory framework to integrate with the traditional financial industry, but the sector cannot be fully regulated. This is the view of Dr. Arak Sutivong, CEO of SCB 10X, the venture arm of Siam Commercial Bank.

Speaking at the REDeFiNE Tomorrow 2021 blockchain event, the executive stressed that DeFi had become mainstream by many metrics.

He cited a tenfold rise in TVL over the past six months, surpassing $100 billion. According to Sutivong, the number of users, the trading volumes on decentralized exchanges and the applications developed point to “huge growth.”

The development of DeFi has uncovered a number of problems, notably fraud. This cannot fail to unsettle the audience and pose challenges for regulators, the CEO of SCB 10X argues.

“DeFi, by definition, cannot be fully regulated. Instead, a framework should be developed to integrate the sector with the rest of the financial ecosystem.”, noted Sutivong.

Earlier in June, CFTC Commissioner Dan Berkovitz stated potential violations by DeFi platforms of US derivatives law.

In July, representatives of the cryptocurrency industry sent an open letter to FATF with their proposals for regulation.

In March, the supranational authority proposed designating DeFi-related projects as VASP and obligating them to comply with anti-money-laundering rules.

Earlier, Thai authorities began to consider regulating the DeFi sector.

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