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INATBA is the global convener of the blockchain ecosystem, with 170+ members dedicated to promoting global adoption of blockchain and DLT technologies by bridging the gap between policymakers and industry stakeholders for mutually beneficial conversations. INATBA has 6 Working Groups, each dedicated to a specific niche within Blockchain. The Finance Working Group is set up to leverage member expertise and knowledge of DLT-based finance issues for development into policy recommendations.
INATBA and its members have, through these Working Groups, reviewed and responded to numerous regulatory proposals, including the European Commission’s Markets in Crypto-Assets regulation (MiCA). MiCA aims to provide legal certainty on the treatment of crypto-assets and crypto-asset service providers in the European Union (EU). The industry is uniquely fast-paced and rapidly evolving and, as such, demands an evolution in knowledge sharing and regulatory approaches.
INATBA’s members have produced this series of four papers to help share knowledge and encourage establishing a new form of a regulatory sandbox to develop modern, appropriate and sustainable regulatory approaches for this unique industry. The series of papers has four parts;
Paper 1 on Decentralised Finance (DeFi) – the one you are about to download now;
Paper 2 on Decentralised Autonomous Organisations (DAOs),
Paper 3 on Non-Fungible Tokens (NFTs), and
Paper 4 is a call to establish a new form of regulatory sandbox.
Together, these papers explore the fluid interchangeability of the technologies and explain how the full potential of these applications may exceed the initial scopes anticipated by policymakers. The Finance Working Group of INATBA has produced these papers by its members and for the ecosystem.
The first paper focuses on Decentralised Finance. Decentralised Finance, commonly referred to as DeFi, is defined as the overall subsection of crypto-assets and smart contract-based automated and permissionless financial services. DeFi, in most cases, is an all-encompassing term for protocol-based services that act cooperatively to form complex and widely available financial services.
DeFi applications provide a number of services that traditional finance may not be able to provide, at least not in the same non-custodial and widely democratic manner. This document highlights, in brief, a number of these use cases, how they operate and what benefits they provide to consumers. The document also expands on some of the limitations and risks associated with DeFi, but most importantly, the regulatory hurdles that the industry will have to overcome to achieve its true potential.
It is INATBA and its members’ position that DeFi, a highly transformative technology, should be widely supported and considered in any upcoming policy proposal. INATBA calls on all interested industry actors, governments and regulators with a strategic interest in this market to join our efforts and collaborate on this important industry topic.
To join our work on this topic, please email us at firstname.lastname@example.org.
Report co-authors: Alireza Siadat (Annerton), Axel von Goldbeck (DWF Law), Dimitrios Psarrakis (XReg Consulting), Donna Redel (Fordham University), Guido Schmitz-Krummacher (Lisk Foundation), Ismael Arribas (KUNFUD), Jan Klesla (Blockchain Republic Institute), Jean-Christophe Mathonet (FeenPOP), Joshua Ellul (Malta Digital Innovation Authority), Lorena Stanescu (Stanescu and Partners), Merav Ozair (Rutgers Business School), Nathan Vandy (Blockchain Helix), Nina-Luisa Siedler (DWF Law), Synthia Bastron (Lisk Foundation), Tom Jansson (IOTA Foundation)