The DeFi market, despite seeing some of the worst downfalls throughout any financial market, is still holding on. Even though many of the companies that are currently in the market have continued to struggle under the consistent barrage of interest rate hikes, various major DeFi projects have failed.
While many of these DeFi projects did fail as a result of macroeconomic conditions that they could not control, it still had a profound effect on investors who ended up losing their investments. Many of the exchanges did say that they had collateral to pay back all of the investors when the project failed, but none have them followed through.
As a result of these DeFi projects failing and investors losing faith in the industry as a whole, many believe that regulation is key to solving this issue. Regulation has long been a very divisive topic in both the crypto and DeFi market.
It is less about how regulation will affect the market, and it is more than what this type of regulation can mean for the market. On a matter of principle, one of the fundamental differences between the crypto market and other financial sectors is that it is not regulated.
The Argument Surrounding Regulation
The entire argument surrounding regulation is that it goes against a lot of what the DeFi market stands for. Others argue that regulation is simply a matter of logistics and that it is not possible for the rest of the market to regulate something that is decentralized.
However, even though these arguments were seen as acceptable by some outside of the crypto community that is no longer the case. As cryptocurrencies are now becoming more mainstream, all of its branches, including the DeFi sector will now need even better regulation.
The Need for Regulation in the DeFi Space
As DeFi continues to be one of the biggest financial markets in the world, many countries are starting to work on their specific type of regulation. They want to make sure that when investors start coming into the field, they will not have to face some of the many problems that others have faced.
Through regulation, everyone in the market will be much safer, especially the investors. These investors might fall for some form of scam or might even become victims of something more malicious.
Working with the Crypto Space to Regulate Crypto
The important thing to understand about the market is that it is growing, and the need for regulation is an acknowledgment of such. But by collaborating with the crypto market, European lawmakers are really looking to bring in more control over the DeFi space.
