Regulatory Warning Ahead! Synthetix Founder: Prepared for Peaceful Intervention or Full-scale Battle
The founder of the synthetic asset protocol Synthetix has expressed his views on "DeFi regulation," stating that he is not opposed to it and firmly believes that DeFi, which he sees as the future primary financial infrastructure, will eventually face regulation. Whether it will be regulated peacefully or through a major battle, he claims to be prepared for both scenarios, but he prefers the former.
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Regulation and DeFi's Common Goal
Synthetix founder Kain Warwick believes that the original intention of DeFi is to create a fair, accessible, and efficient financial market. Interestingly, regulatory agencies share a remarkably similar goal. Therefore, the responsibility of DeFi projects is to help regulators understand DeFi's ability to achieve financial inclusion.
Warwick pointed out:
In the past two weeks, I met with several DeFi project founders for the first time. What resonated with me is that everyone believes that DeFi is building something revolutionary that will benefit the world. We all know how great DeFi is, but we haven't properly explained the details to regulatory agencies.
DeFi and regulators have incredible alignment. We all want fair, open and efficient markets. The fact that regulators don’t understand how much better DeFi is at achieving these outcomes is our issue to solve. The burden of proof is always going to be on novel technology.
— kain.eth (✨🔴_🔴✨) (@kaiynne) August 4, 2021
Flaws in Traditional Finance
Warwick mentioned the flaws of traditional finance (tradfi), which require numerous fragmented and piecemeal regulations to function. He also cited the perspective of UMA co-founder Hart Lambur:
Throughout history, financial markets have been mostly restricted by nations and regions, resulting in millions of overlapping regulatory laws that lead to inefficiency and conflicts. DeFi is poised to eliminate 99% of regulatory laws.
Inevitability of Regulation
Many DeFi developers believed they still had time to build before regulation arrived. However, DeFi has evidently grown to a size that poses a threat to regulatory bodies. Warwick mentioned that their current task is to transform the fears and suspicions of regulators into optimism.
He stated:
Within the next decade, the majority of global financial infrastructure will be based on DeFi, which is inevitable. However, they must be willing to engage with skeptics fairly, as this is their responsibility in the real world.
Warwick emphasized that the regulatory landscape is changing, and DeFi practitioners need to decide whether to cooperate with regulators peacefully or engage in a battle. He claims to be prepared for both scenarios but prefers the former.
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