The Financial Stability Board (FSB) jumped into the Crypto industry support and aimed to bring a better regulation system to regulate all the Decentralised Crypto protocols.
Decentralised Finance (DeFi) came into light around 4 years ago during a discussion between Ethereum developers in a telegram group. To this date, huge numbers of Defi protocols are available, where people can deposit, withdraw, and lend their funds to get revenue. Because of the highly decentralised nature, it is hard to implement a regulatory framework on the Defi protocols.
On 16 Feb 2023, The Financial Stability Board (FSB) announced that its team is planning to explore ways to introduce a Global Crypto regulation framework on the decentralised crypto exchanges.
FSB stated:
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“DeFi does not differ substantially from traditional finance in the functions it performs or the vulnerabilities to which it is exposed”
Defi protocols, Russia vs Ukraine conflict & outcomes
At the beginning of 2021, the majority of the Crypto tokens & coins related to Defi protocols were at their peak in terms of popularity. Every new project in the crypto sector was adding Defi word with their service model, to grab popularity in the crypto sector.
With the end of 2021, the majority of the tokens including Defi tokens plunged badly, as a part of the usual bear market phase.
2022 was a report card year for the all Crypto projects. In the that year, many crypto projects failed & collapsed because their business model was very weak or they were playing games in the crypto sector on behalf of hype & news.
Last year, Crypto Investors saw that many decentralised crypto platforms followed international financial sanctions against Russia. The whole situation showed that the majority of the Defi protocols were centralised to a greater extent.
For example, a few platforms banned the trading of some particular crypto assets, few imposed IP addresses & crypto address-targeted bans on particular users.
In the last year, many Defi protocols including crypto hardware wallet service providers introduced KYC barriers for the customers as an mandetory part to access the services.
The latest statement by the FSB agency is showing that they are also aware of the centralised nature of Defi protocols and they believe that a digital KYC system & regulatory system can be easily introduced.
Read also: FuelHash adds support for XRP coin
FSB will bring global regulation framework for the Crypto Defi sector
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