On March 22, CFTC technical committee engaged prominent crypto executives to discuss the risk and opportunities in the decentralized finance (DeFi) space. The crypto entrepreneurs mentioned the setback limiting the growth of DeFi.
During the engagement, the key players in the crypto space presented the main challenges that require the regulators to take corrective action.
Why was the CFTC and Crypto Executive Meeting Important?
A report from CFTC member Christy Goldsmith Romero revealed that the engagement played a crucial role in developing crypto regulation. Romero stated that formulating crypto regulation that fits the market requires regulators and legislators to understand DeFi better.
In support of Romero’s remarks, the head of compliance at TRM Labs, Ari Redbord, issued a keynote speech highlighting the scope of DeFi and blockchain technologies. Redbord elaborated on the importance of blockchain technology.
He argued that the blockchain privacy feature enabled the regulators to safeguard the interest of the consumer and the investor. Also, Redbord revealed the challenges facing the DeFi space. He stated that blockchain technology has numerous benefits compared to the merits.
Redbord is optimistic that the emerging technologies would soon provide suitable solutions to the DeFi challenges. A subsequent presentation from the founder of Metrika, Nikos Andrikogiannopoulos, revealed that the challenges in the DeFi space are invertible.
Andrikogiannopoulos restated the need to adopt DeFi tools to cope with emerging technologies.
DeFi Market Performance
According to Redbord’s statement, the collapse of the Bahamian crypto exchange FTX affected the DeFi market. Besides the after-effect of the FTX, the DeFi market has regained strength.
The March 22 meeting tasked the developers in the DeFi space to invest in developing innovative solutions to the decentralized platforms’ challenges. A speech from Espresso Systems and Terranet Ventures expounded on the strategies to address the challenges facing non-custodial digital wallets and virtual identities.
The executives advise the crypto firms to develop softwares similar to development on the MetaMask wallets to mitigate the password recovery concern on the non custodial assets. Additionally, security experts from Fireblocks mentioned the system security breaches affecting the decentralized platforms.
The Fireblocks team argued that the increase in cybercrime launched on decentralized programs necessitates the regulators and the developers to team up to address the security concern. The team echoed last year’s report on DeFi exploits, which exposed the investor to a loss of more than $2 billion in 2022.
The DeFi platform witnessed 133 attacks in the previous trading year.Recently, hackers attacked Euler Finance, heisting assets worth $197 million. The Euler exploit is the largest attack in the DeFi space in 2023.
The need to address the DeFi platform’s problems inspired the participants to develop a Digital Assets and Blockchain Technology Subcommittee (DABTS). The elected subcommittee members were tasked with campaigning for DeFi adoption. The team will work closely with the regulation to address the current threats and risks facing DeFi.