Opinion: Hedi Navazan, conformity director in 1 inch

Web3 needs a clear regulatory system that refers to the bottlenecks of pioneering and the security of users in decentralized finances (DEFI). One universal approach to DEFI regulation cannot be achieved. The industry needs custom, based on the risk of approaches that balance innovation, security and compatibility.

DEFI challenges and rules

The joint criticism is that regulatory control leads to the death of innovation, following this situation to Biden administration. In 2022, uncertainty for cryptocurrency companies increased after court trials against Coinbase, Binance and Opensea for alleged violations of securities.

Pursuant to the US administration, the Securities and Exchange Commission agreed to dismiss the lawsuit against Coinbase, when the agency reversed the cryptographic attitude, indicating the path to regulation with clear limits.

Many say that the same risk is the same rule. The imposition of time-honored financial requirements on DEFI will simply not work with many aspects, but from the most technical challenges.

Openness, transparency, immutability and automation are key default parameters. However, without clear regulations, the common issue of “patterns similar to Ponzi” may direct focusing from effective cases of innovation to conjure up “deceptive perception” of blockchain technology.

Guidelines and clarity of regulatory bodies can reduce a significant risk for retail users.

Decision makers should spend some time understanding the Defi architecture before the introduction of restrictive resources. DEFI needs the risk of regulatory models that understand its architecture and relate to illegal activities and consumer protection.

Self -registration frames cultivate transparency and safety in DEFI

The entire industry strongly recommends implementing a self -regulatory framework, which provides continuous innovation, while ensuring consumer safety and financial transparency.

Take an example of the Defi platforms that have adopted a self -regulatory approach, implementing solid security measures, including transaction monitoring, a portfolio test and the implementation of a black list mechanism that limits the suspicion portfolio with illegal activity.

Solid security measures would aid DEFI projects monitor onchain activity and prevent improper utilize of the system. Self -care can aid DEFI projects to act with a greater ID, but may not be the only solution.

The key structure and management are key

It’s no secret that institutional players are waiting for regulatory green airy. By adding to the list of regulatory frames, markets in cryptocurrencies (MICA) set Stepping stones for future DEFI regulations, which can lead to institutional DEFI reception. Provides companies with regulatory transparency and frames for action.

Many cryptocurrency projects will fight and die as a result of higher costs of compatibility related to Mika, which forces a more reliable ecosystem, requiring increased transparency of issuers and quickly attract institutional capital to innovation. Clear regulations will lead to more investments in projects supporting investor trust.

Anonymity in Crypto disappears quickly. Blockchain analytical tools, regulatory authorities and companies can monitor suspicious activity while maintaining user privacy. Future adaptations of MICA regulations may enable DEFI concentrated solutions, such as compatible liquidity pools and verification of blockchain -based identity.

Adjusting transparency may break the barriers to DEFI integration

The Bank’s Iron Gate was another significant barrier. Compliance officers often witness how banks collect walls to stop crypto. Companies at the distance of banks’ supervisors, which are incompatible, even if it is an indirect control or fine, slamming the financial doors of cryptographic projects.

Clear regulations solve this problem and make compliance a facilitator, not a barrier for DEFI and banking integration. In the future, time-honored banks will integrate DEFI. The institutions will not replace banks, but will combine DEFI performance with the TRADFI structure.

Last: Hester Peirce calls for the creation of SEC for “baking in” cryptocurrency regulation

The repeal of the personnel accounting bulletin (SAB) 121 in January 2025, the banks’ accounting was narrow to recognizing cryptocurrency assets maintained for clients as both assets and obligations in their balance sheets. Previous regulations caused obstacles to increased capital reserve requirements and other regulatory challenges.

SAB 122 aims to ensure structured solutions, from reactive compliance to proactive financial integration – a step towards creating defa and bank synergy. Cryptocurrency companies must continue to comply with accounting principles and requirements for disclosing information to protect cryptographic assets.

Clear regulations may boost the frequency of banking utilize, such as care, reserves, tokenization of assets, Stablecoin emissions and offering bills for digital assets.

Building bridges between regulatory bodies and innovators in DEFI

Experts indicating concerns about excessive regulation of DEFI innovation may now deal with them using “regulatory sandstone organs”. These resignations from the “Safe Zone” to test your products before committing to full -length regulatory fines. For example, startups in Great Britain as part of the financial injury office are developing using this method of “trials and errors” that accelerated innovation.

They enabled companies to test innovation and business models in the real environment under the regulator supervision. Sandboxes can be available to licensed entities, unregulated startups or companies outside the financial services sector.

Similarly, the European Union pilot regime develops innovation and competition, encouraging to introduce the startup market by reducing the costs of compliance through “gates”, which adapt the legal framework at every level, while updating technological innovations.

Clear regulations can cultivate and support innovations through an open dialogue between regulatory bodies and innovators.

Opinion: Hedi Navazan, conformity director in 1 inch.

This article is used for general information purposes and should not be and should not be treated as legal or investment advice. The views, thoughts and opinions expressed here are themselves and do not necessarily reflect or represent the views and opinions of Cointelegraph.