The French financial regulator, the Autorité de contrôle prudentiel et de résolution (ACPR), has published a consultation paper presenting the outcomes of public feedback regarding regulations on decentralized finance (DeFi).
“A diverse range of stakeholders contributed: traditional financial institutions, consulting and auditing firms, as well as representatives of the crypto and DeFi ecosystems, including some global leaders in the sector,” the report stated.
French Financial Regulator Questions the Accuracy of the Term DeFi
The report indicates that the survey findings have provided the French regulator with a more comprehensive understanding of the technical aspects of DeFi:
“On a technical level, the public consultation has helped consolidating and refining the ACPPR’s understanding of the main DeFi mechanisms.”
It highlighted results indicating respondents are advocating for DeFi activities to continue on public blockchains. However, they were not pushing for those on private blockchains. Meanwhile, they call for more security features to be implemented:
“Respondents do, however, recognise the need to strengthen the resilience of these infrastructures.”
Read more: Top 5 DeFi Lending Platforms
Furthermore, the ACPR suggests that a more fitting term exists to describe these activities than “DeFi.”
“Similarly, participants in the consultation have highlighted the structural persistence of elements of centralisation in the way DeFi protocols operate. The ACPR therefore believes that the term “disintermediated” finance is more appropriate than that of “decentralised” finance.”
Recent Surge in DeFi Exploits Raises Concerns
Growing concerns about DeFi have arisen due to the increasing number of hacks and exploits that have taken place recently.
On September 25, BeInCrypto reported a security breach involving the Mixin Network blockchain. Hackers targeted their cloud service provider’s database on September 23, resulting in a substantial loss of approximately $200 million.
Mixin Network claimed that they had contacted Google and blockchain security company SlowMist to assist with the investigation.
Just a few weeks before the significant Mixin Network hack, the DeFi protocol Balancer also fell victim to an attack.
The blockchain security firm PeckShield disclosed that the attack resulted in the theft of $238,000 worth of crypto assets.
On the other hand, the Bank of Italy issued a report highlighting the numerous advantages of DeFi, such as smart contract automation, atomic settlement, and transparency. However, the report emphasizes that DeFi currently has limited practical utility.
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