According to Will Reeves, CEO and co-founder of Bitcoin (BTC) Rewards Company Fold, the Decentralized Financial (DEFI) protocol overcomes government and business efforts to impose traditional financial regulations designed to create walled gardens of permitted digital systems.
Reeves told CointeLegraph that a regulatory proposal that calls for the Defi protocol to embed biometric identity checks in smart contracts or other similar traditional financial (TradFI) regulations backfired as well as efforts to control the spread of information on the Internet.
He also warned that governments and legacy financial institutions will use TRADFI incentives to promote permitted custody of people through traditional investment instruments such as Exchange Trade Funds (ETFs), which benefit directly from holding crypto, including use as collateral for loans. He added:
“This is just a chapter that leads to the inevitable victory of these open networks. Over time, they win, but in the process, you will see what is meant to slow regulation and progress.”
Reeves told the Cointelegraph.
Despite this pressure, he said protecting open source software developers from liability remains a top priority for protecting unauthorized financial protocols from over-centerization and regulatory over-regulation.
Related: The US Treasury defi ID plan is “like having a camera in every living room.”
Financial institutions and governments enter the world of crypto
As legacy financial institutions continue to increase their presence in crypto and demand more strict government regulations than in sectors, proponents of privacy and financial sovereignty fear that an increase in surveillance could undermine core principles of crypto and debt.
Defi Protocols promises to democratize funds and bank banks, enabling anyone in the world to have mobile phones and internet connections to change value and risk through an open, global financial system.
Enforcing government-issued credential checks, or impose other known (KYC) requirements on the Defi protocol promotes risks of unauthorized access, decentralization, and financial surveillance, and increases financial surveillance risks.
Critics of these policies argue that these risks are also indistinguishable from defi, which is indistinguishable from the legacy financial system they intended to replace.
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