WEF published a report on the risks and advantages of Defi - Bits Media

World Economic Forum (WEF) published a paper on the opportunities and risks of decentralized finance (DeFi), and also about its impact on the financial sector.

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The document describes problems, which can be solved with the help of this developing Cryptocurrency industry sector. It also presents general information about Defi, In order for politicians and regulators to receive a broader performance about it.

Researchers of the WEF paid special attention to risks, associated with Defi. Primarily, This is the probability of losses, which can occur due to the actions of counterparties, lack of liquidity or hacker attack. There are also technical risks-there is a probability of failures in the operation of software systems or errors in smart contracts. Besides, Defi can be used to commit financial crimes, fraud and market manipulations.

The authors of the document indicated, that Defi raises many questions about that, Does regulatory organs have tools for rapid response to growing activity in the cryptocurrency market. Researchers emphasized, that decentralized finances, Like any other latest technologies, used at the international level and have no boundaries. Therefore, regulatory authorities of different countries should develop an integrated approach to monitoring the DEFI industry.

VEF did not indicate specific measures, which can be used by regulators. However, WEF researchers proposed creating “normative sandboxes” to test projects, working with decentralized finances, or tighten the regulation rules, how it happened after the ICO at the end 2017 And the beginning 2018 of the year. At the same time, the WEF recognized, that Defi is a separate industry, which can significantly affect the development of blockchain, and for the entire international financial sector.

Head of the Blockchain Development Department and Digital Assets of the VEF Sheila Warren (Sheila Warren) stated, that to some extent, Defi allow more democratically working with financial services, Whether it is lending or insurance. Warren thinks, that you need to find a "balance" between providing confidentiality and regulatory provisions, aimed at combating illegal activities and laundering. Otherwise, excessive regulation will complicate the output of the participants of the Defi industry to the market, that will restrain the development of innovation.

Director of the Network for Combating Financial Crimes of the United States (FinCEN) Michael Brain (Michael Mosier) said, that Defi expand the financial capabilities of people. The brain added, that the published report allows you to get a more clear idea of Defi, Therefore, governments should use this information to develop a more clear regulation of this industry.

Recall, that at the beginning of the year, the WEF presented the guide to create state digital currencies, so that central banks can decide, Is it worth it to develop their own digital currency.