DeFi

New EU regulations pose risk to future of decentralization

Published

9 months ago

14 May, 2024

New European Union regulations could soon force decentralized finance (DeFi) protocols to face important decisions. At the center of this problem is the tendency of many DeFi protocols to use centralized front-ends and intermediaries, raising questions about their compliance with upcoming laws.

The impact of MiCA on DeFi protocols

The European Markets in Crypto Assets (MiCA) Regulation, which is expected to come into full force by the end of 2024, requires DeFi protocols to adhere to the same licensing and know-your-customer (KYC) requirements as traditional financial services. This could present a significant challenge for many DeFi protocols, potentially making compliance difficult or undesirable. Rune Christensen, co-founder of MakerDAO, highlighted the implications of MiCA, noting that DeFi protocols would be left with two main options: fully decentralized, local, uploaded frontends or fully KYC-compliant online frontends.

This regulatory change forces DeFi protocols to choose between a somewhat centralized “hybrid finance” (HyFi) model to comply with EU regulations or complete decentralization. The EU regulation states that fully decentralized protocols are exempt from MiCA requirements, as stated in recital 22: “Where crypto-asset services are provided in a fully decentralized manner without any intermediaries, they should not enter into the scope of this regulation. »

Defining decentralization

Oliver Völkel, lawyer and partner at Stadler Völkel, has studied European regulation of crypto assets in depth. He points out that the regulation raises immediate questions about the definitions of “without intermediary” and “in a completely decentralized manner”. According to Völkel, smart contracts used to provide services on cryptoassets do not necessarily create the appearance of exclusive decentralization, as companies can use these contracts to provide services on their behalf.

Only natural and legal persons can have rights and obligations, make and receive legal representations and be subject to laws such as MiCA. However, Völkel believes that European lawmakers rightly recognize that none of these conditions apply if a crypto-asset service is accessible without an intermediary and in a fully decentralized manner. With MiCA coming into force by the end of 2024, DeFi protocols in Europe must decide whether to be completely decentralized, thereby avoiding regulations, or implement KYC measures like any other centralized financial service provider.

Nathan Catania, partner at XReg Consulting, a firm specializing in the regulation of crypto-assets, suggests that this regulatory wave could divide the DeFi sector. He believes that regulation represents a crucial moment for many DeFi projects, pushing them to either embrace complete decentralization and operate outside of regulatory boundaries, or accept some level of regulation and transition to a hybrid financial model.

Practical steps for decentralization

For those choosing decentralization, MiCA will provide clearer guidance on building truly decentralized applications that comply with regulatory requirements. Many DeFi protocols will need to reevaluate their business models to ensure they remain compliant. Catania advises DeFi projects to fully understand the regulations and engage with national regulatory authorities to protect their interests. A workaround to ensure decentralization is to decentralize website front-ends through peer-to-peer (P2P) web hosting, which uses advanced cryptography to deploy websites on P2P servers.

Whatever path a protocol chooses, regulation becomes an unavoidable reality. Proponents of decentralization could see DeFi evolving into something closer to traditional finance, the very industry they originally aimed to disrupt. The question remains whether the industry will thrive in a decentralized digital universe or whether the influx of capital from traditional market players will transform the sector.

Growing Regulatory Attention on DeFi

As the DeFi sector matures and gains popularity, regulators are paying increased attention to it, as evidenced by the actions of the EU’s MiCA and the US Securities and Exchange Commission against major DeFi protocols. On April 10, 2024, Uniswap became the first decentralized protocol to receive a Wells Notice, indicating regulatory violations.

Hayden Adams, CEO of Uniswap, expressed his frustration, feeling “annoyed, disappointed and ready for a fight.” Adam Simmons, chief strategy officer of DeFi platform Radix, believes some safeguards are necessary, predicting that regulatory requirements for DeFi are inevitable, especially if the sector aims for global adoption.

Today @Uniswap The labs received a Wells Notice from the SEC.

I’m not surprised. Just annoyed, disappointed and ready to fight.

I am confident that the products we offer are legal and that our work is on the right side of history. But it has been clear for a while that rather than…

– hayden.eth 🦄 (@haydenzadams) April 10, 2024

Edward Adlard, CEO of Instalabs, sees the next stage of DeFi evolution as attract money from institutional and traditional finance. However, he identifies two main obstacles: traditional financial companies are not operationally equipped to use crypto tools, and they must figure out how to legally access and offer these products to their customers. Adlard suggests that DeFi DApps must balance implementing anti-money laundering (AML) procedures to attract traditional financial liquidity without becoming targets for regulatory action.

Compliance and future adaptation tools

Compliance tools are already available. Simmons mentions that the DeFi sector in Europe could use a system of trusted issuers to handle identity verification independently. Adlard notes that the DeFi KYC service Instapass could create personalized credentials that comply with EU regulations, allowing DeFi DApps to restrict access to specific parts of their products based on user credentials.

Ultimately, whether a DeFi protocol aims for institutional adoption or full decentralization, it must adapt to the changing legal landscape of the European Union.

Fuente

DeFi

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Published

6 months ago

29 July, 2024

CoinFlix Staff

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Bonk and Pepe appear set to net new investors 10x to 100x returns over the next 12 months. However, cryptocurrencies in the DeFi play-to-earn gaming sector could offer even greater returns. As August approaches, Rollblock is emerging as a standout DeFi play-to-earn gem with the potential to 100x-1000x gains in the fourth quarter and beyond.

The project features an innovative revenue sharing model and exceptional accessibility, attracting players and investors. Additionally, Rollblock’s extensive game library of over 150 titles and enhanced sports betting are further driving excitement for the platform. Cryptocurrency analysts are expecting a sudden surge in demand. 800% a push for Rollblock from the beginning of September.

Bonk remains strong despite market fluctuations

While most well-known cryptocurrencies struggled throughout July, Bonk remained strong. As one of the highest-grossing meme cryptocurrencies of 2024, Bonk rose over 24% in July, while most cryptocurrencies experienced negative fluctuations.

Investors looking to add a relatively safe memecoin to their portfolio should consider Bonk. While Bonk is unlikely to generate explosive gains of 250x to 1,000x from here on out, Bonk could still theoretically provide returns in the 20x to 100x range.

Pepe should see a big rise in the next bull run

Alongside Bonk, Pepe has yet to go through a bull run. This means that there are still substantial gains to be made from Pepe over the next 12 months.

Pepe is down 4% in 30 days, but that shouldn’t worry Pepe investors in 2024. Experts believe Pepe’s best days are still ahead, with crypto analysts predicting a 10x to 50x surge in the next election cycle around November.

In the long term, Pepe could surpass the 100x mark for today’s investors. However, Pepe is a memecoin, and one should exercise caution when investing in purely speculative assets that have no utility.

Rollblock’s Unprecedented Hype Potential Could Push It Past 100x Valuation in Q4

Rollblock is a GambleFi Play-to-Earn token that integrates centralized and decentralized gambling on a single platform. By allowing players to earn rewards through active participation and gameplay, the platform creates a compelling incentive structure that appeals to both casual and competitive players.

With its cutting-edge blockchain technology, Rollblock offers top-notch security that keeps bets and transactions on the platform secure. The platform’s lack of KYC mandates appeals to both users who value anonymity and security.

Rollblock’s revenue sharing model, which allocates up to 30% of casino revenue to RBLK token holders, is a major draw for investors. The model involves burning half of the repurchased tokens and distributing the other half to stakers, increasing the token’s value and encouraging long-term investment.

The platform is also constantly evolving thanks to user feedback which has enabled updates such as the upcoming sports betting feature within the platform’s casino. This addition will complement Rollblock’s extensive game library of over 150 titles, ranging from traditional poker to innovative blockchain-based games.

RBLK is expected to emerge as one of the leading DeFi tokens in 2024. With a price of $0.0172 with impressive growth potential and over 140 million tokens sold recently, Rollblock is on track to enter the top 100 cryptocurrencies by Q4, making today a lucrative time to buy RBLK tokens.

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Fuente

DeFi

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Published

6 months ago

29 July, 2024

CoinFlix Staff

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Veteran cryptocurrency investor Arthur Cheong believes the digital asset sector offers long-term holders a golden opportunity.

Cheong, the founder of DeFiance Capital, tell His 171,700 followers on social media platform X indicate that he believes decentralized finance (DeFi) is hugely undervalued.

According to Cheong, DeFi projects are innovating at a rapid pace and leaving traditional financial (TradFi) companies in the dust.

“It’s been a long time since I’ve been this excited about the risk/reward and potential upside of DeFi. This is probably the most misjudged moment since the pre-DeFi summer of 2020, with extremely promising prospects.

I see opportunities not only in OG (original) DeFi, but also in some newer projects that are evolving rapidly and growing at a pace that fintech startups will do anything to match.

The veteran investor also believes that crypto is now here to stay following recent launch from the Ethereum spot market (ETH) exchange-traded funds (ETFs) last week.

“Overall, the floodgates are open and there is no turning back. TradFi asset managers will continue to launch new crypto products because, guess what: there is huge demand for them!”

I expect them to launch actively managed crypto ETFs [in the] coming years. ”

Earlier this month, Cheong laid that it might be a bad strategy for cryptocurrencies to seek mass adoption, believing that digital assets are designed to disrupt several key financial sectors.

“I think we should accept that cryptocurrencies may not be suited for mass adoption like Web2, but rather are optimized for some narrow but very high-impact use cases like stateless global money, cross-border payments, and decentralized finance.

Chasing mass adoption of normies may be chasing the wrong Grail from the start.

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