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DeFi Policy Issues Included in WEF Adoption Report

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DeFi Policy Issues Included in WEF Adoption Report

The World Economic Forum released its Decentralized Finance (DeFi) Policy-Maker Toolkit, providing regulators with guidance for DeFi adoption.

WEF created the toolkit in collaboration with the Blockchain and Digital Asset Project at the Wharton School of the University of Pennsylvania. It includes contributions from academics, legal practitioners, DeFi entrepreneurs, technologists, and global policy-makers and regulators. This is the second such report from WEF, after its initial release, DeFi Beyond the Hype.

Interest in cryptocurrencies and DeFi rose significantly during the pandemic, leading to an acceleration in investment. According to the report, the value of digital assets locked in DeFi smart contracts grew 18-fold in the past year, from $670 million to $13 billion. Additionally, the number of associated user wallets grew 11-fold, from 100,000 to 1.2 million, and the number of related applications grew from eight to more than 200.

Foundational DeFi understanding for policy-makers

In light of this surging adoption, WEF recognizes the industry’s potential to transform the financial system, so the toolkit includes several policy proposals to help mitigate its risks. First, it provides a foundational understanding of the factors important for policy-makers. It also provides an overview of DeFi, while exploring and illustrating its benefits and risks with case studies.

Aside from industry experts, the toolkit also features contributions from government representatives around the world. These include those developing Europe’s Markets in Crypto-assets (MiCA) framework as well as major U.S. financial regulators. Notably, the government of Colombia is explicitly planning to use the toolkit for its policy-making and regulations.

“We were pleased to contribute to the toolkit and we are looking forward to using it to inform approaches to this space that are balanced, risk-aware, and forward-looking,” said Jehudi Castro Sierra, Digital Transformation Advisor, Presidency of Colombia. “As the first country in the region to use the Policy-Maker Toolkit, we aim to be the leader in Latin America for DeFi policies and regulation.”

With the acknowledgment of a global, influential institution like the WEF, DeFi seems on the cusp of mainstream understanding and acceptance. Galaxy Digital CEO Mike Novogratz made similar overtures recently, saying adoption would “explode” once regulatory kinks were ironed out. The toolkit is a step forward for governments to understand the new paradigm and to adapt to it appropriately.

The post DeFi Policy Issues Included in WEF Adoption Report appeared first on BeInCrypto.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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