New DeFi Regulation in Europe may benefit big banks, but at the same time, set significant obstacles for crypto-based startups.
DeFi is expected to grow to a worth of $6.69 billion by the end of this year, and by 2028, it should be moving toward $9.68 billion.
It is expected that by December 2024, the European Commission will launch a report suggesting the regulation of DeFi, which is digital, decentralized finance based on blockchain networks meant to provide financial services to people, such as loans and trading.
According to Marina Markežić, the rules that will come into effect under the new regulations will benefit traditional financial institutions.
“We think that this regulation will facilitate those [traditional] players to come into this crypto space. We know that some banks are already thinking of issuing stablecoins,” she added.
The dilemma for regulating authorities arises when attempting to determine if DeFi systems enjoy the authority of the central regulatory machinery or not. The “DeFi spectrum” regulation method is the solution introduced by Markežić, a form of regulation that depends on the amount of control within the DeFi project.
Legal luminaries like Sascha Drohnjak, former CEO of Elusive Protocol’s legal and compliance, consider transparent standards better than stringent rules.
Also Read: Custodia Bank Appeals for Access to Federal Reserve Services
Read More: EU DeFi Rules: Banks Favoured, Crypto Startups Challenge
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