Many DeFi organizations are becoming open to the idea of regulations to protect themselves and users from hacks, scams, and other issues. Astra provides a unique way for Decentralized Finance to fulfil the regulations without becoming centralized or compromising their products and services.
Decentralized Finance is a beautifully innovative anomaly. For a start, DeFi makes financial services more accessible and overall inclusive. It also tends to mimic the economic systems we see in the real world, opening investment opportunities for those in disadvantaged markets. However, there have been many events where high value ‘rug pulls’ have caused users to lose vast sums of money, leaving institutions, regulators and investors with a stained perception of certain aspects of the sector.
Caroline Crenshaw, SEC Commissioner, said,
“I recognize it is not the SEC’s role to prevent all investment losses. It is also not my goal to restrict investor access to fair and appropriate opportunities.”
The commissioner then identified two specific structural problems that the decentralized finance (DeFi) industry needs to address: a lack of transparency and pseudonymity.
To those within DeFi, comments about lack of transparency may appear to be based on nothing more than preconceived ideas from those opposed to the market space, as transactions on public blockchains are visible to anyone willing to look.
The SEC Commissioner clarified her position by referring to the underlying code, ‘put simply, if a retail investor has $2,000 to invest in a risky programmable asset, it is not cost-effective for that investor to hire experts to audit the code to ensure it will behave as advertised.’
“It is a positive sign that many projects say they want to operate within DeFi in a compliant way… For DeFi’s problems, finding compliant solutions is something best accomplished together,” SEC Commissioner Crenshaw.
The growth of DeFi seems inevitable. The efficiency of decentralized financial overcomes many outdated systems in traditional financial markets.
“There is little doubt that DeFi is still at early stages and thus has a lot of potential to grow over time. But until it becomes mainstream it faces several hurdles,” — JPMorgan.
Astra Protocol is a decentralized compliance layer that allows DeFi organizations to comply with regulations without becoming centralized. Astra brings trust to the DeFi market through enhanced investment and consumer protection. With an innovative legal layer that provides much needed institutional trust. Our technology allows the whole Decentralized Finance market a route to continual progress in an uncertain regulatory landscape, without any compromise.