DeFi, By Definition, Cannot Be Fully Regulated, Says Siam Commercial Bank Chairman

Arak Sutivong, CEO of SCB 10X and Chairman of Siam Commercial Bank (SCB), has offered insight into how one of the largest venture capital funds in Southeast Asia sees the future of decentralized finance (DeFi) as it relates to to the controversial question. regulation.

SCB 10X is the venture arm of SCB, Thailand’s oldest bank, and is primarily focused on investing in blockchain-based financial services such as DeFi and digital assets.

In his keynote address at SCB 10X’s 2nd Annual Global DeFi Virtual Summit, REDeFiNE, Sutivong stressed that by now, DeFi had made its way into the mainstream “by many measures.” In terms of growth, he noted that the sector had increased tenfold in the past six months, with more than $ 100 billion in total value locked into the DeFi ecosystem this year. Based on many other metrics, including users, volume traded on exchanges, and decentralized applications developed, the sector, he said, has witnessed “tremendous growth.”

However, with all this development and enthusiasm, Sutivong emphasized that various problems continue to haunt the nascent industry, noting that “there are some areas of concern like fraud that we keep hearing on the news. There has been a lot of concern from industry stakeholders and regulators. “ Addressing this in the medium and long term poses unique challenges, in their view, given that:

“DeFi, by definition, cannot be fully regulated. Instead, there must be a framework for how DeFi can integrate with the rest of the financial ecosystem. “

Sutivong’s comments on sustainability and evolving approaches to regulatory compliance follow a series of interventions by regulators and global organizations, ranging from the proactive to the downright hostile.

Related: Bulls are back, but regulatory fears hamper DeFi and altcoin rally

In early June, the World Economic Forum released a set of policy tools for DeFi, proposing ways to balance compensatory needs, such as meet decentralization and privacy aspirations, while mitigating illicit activities such as money laundering. More specifically, the toolkit addressed concerns that new regulatory interventions could impose significant costs on DeFi startups, discouraging smaller participants from entering the market.

These concerns have been particularly acute for many DeFi developers who are unsure how the Financial Action Task Force’s recommendations to regulate virtual asset service providers it will affect them.

In early June, Dan M. Berkovitz, commissioner of the United States Commodity Futures Trading Commission, stated that he believes DeFi derivatives platforms could contravene the Basic Products Exchange Law of the country and therefore be illegal.