A co-founder of exchange 1inch believes that many still do not understand the relevance of DeFi. A French bank executive thinks there must be more regulations on decentralized cryptocurrencies like Bitcoin.
Sergej Kunz recently said that the ecosystem of cryptocurrencies and decentralized finance (DeFi) is like the Internet in its early days. The co-founder of decentralized exchange 1inch explained that few people expected the Internet to be as helpful as today.
The developer thinks that the same happens with DeFi and cryptocurrencies like Bitcoin (BTC) and Ether (ETH). He hopes to see the former grow as an alternative system and a part of the primary financial system.
Laurent Marochini, director of the financial company Société Générale, expressed that he is open to decentralized finance. He stated that he does not see it as a competition but as an evolution in the economic system. He estimated that using some DeFi products like stablecoins would be frequent in the traditional system within ten years.
The Representative of the Banking Sector Calls for Regulations on DeFi
Marochini believes that DeFi lacks more regulation for its massive adoption in the financial system. He mentioned that he had a problem with his credit card due to a hack some years ago. At that moment, the bank could solve the problem and reverse the illicit transactions that had occurred.
Although the executive thinks it should be possible to do the same with DeFi, he knows cryptocurrency transactions are irreversible. For that reason, he considers the closest thing would be a system that allows identifying the identities and addresses of its participants.
However, some decentralized finance platforms already implement registration processes and comply with KYC (know your customer) policies for institutional investors to accept them.
Many cryptocurrency users criticize that situation and agree that those platforms are no longer decentralized. People often associate Bitcoin and other cryptocurrencies, as well as DeFi, with financial freedom and privacy. For that reason, they usually find providing personal data to a platform to be something not desirable.
Despite that, there are constant advancements in regulatory attempts on the cryptocurrency ecosystem. Ironically, that regulated environment allows traditional finance to add Bitcoin-related products to its portfolio.
A Growing Number of Banks Look to Bitcoin as an Option
Many banks in various parts of the world add custody services for cryptocurrencies like Bitcoin and Ether. They also allow purchasing and selling those assets to meet the demand from their customers.
Those financial institutions include the Bank of New York Mellon, the oldest in the United States, which offers BTC custody services. French bank CACEIS is also preparing to provide the safeguard of cryptocurrencies.
The customers of those financial entities are usually large institutional investors, who prefer to cede custody of their BTC to third parties. They seem not to like having to assume the responsibility of storing their holdings in self-custodial wallets.
The relevance of cryptocurrencies in the world economy is growing, but many people still need to know their potential. Traditional financial institutions are also becoming increasingly interested in including them in their portfolios, for which they request data about their customers.
By Alexander Salazar
