Welcome to Finance Redefined, your weekly source for crucial insights into decentralized finance (DeFi) – a newsletter designed to bring you the most important updates from the past week.
In an interview with Cointelegraph, the president of Ripple suggested that 2024 could be the year when DeFi regulations take center stage. Meanwhile, the United States Securities and Exchange Commission (SEC) has introduced a fresh definition for “dealer” and “government securities dealer,” specifically targeting liquidity providers in the DeFi sector. However, experts believe that stakeholders will challenge this new rule in court.
The top 100 DeFi tokens had a positive week, reflecting the broader market gains, and the total value locked (TVL) in DeFi protocols exceeded $63 billion.
DeFi compliance is expected to become a prominent industry trend in 2024, according to Ripple’s president, Monica Long. In an interview with Cointelegraph, Long explained that previous hype cycles driven by initial coin offerings and nonfungible tokens will be replaced by real-world usability and integration with existing systems, which necessitates compliance.
Experts anticipate that the new dealer rules introduced by the SEC will face legal challenges. On February 6, the SEC adopted these rules, which redefine the terms “dealer” and “government securities dealer.” Proposed in 2022, the rules require more participants in the crypto market to register, join a self-regulatory organization, and comply with federal securities laws. The crypto community, DeFi ecosystem, and pro-crypto politicians have criticized these rules, citing a lack of clarity regarding the definition of crypto securities.
EigenLayer, an Ethereum-based liquid restaking protocol, experienced a remarkable surge of $1 billion in TVL within eight hours after temporarily removing its staking cap. EigenLayer announced on February 5 that it would lift its 200,000 Ether (ETH) per protocol staking cap until February 9 to attract organic demand to the network. The protocol sees this temporary removal as a step towards a future where all staking caps are permanently eliminated.
A recent case involving Block Earner in an Australian federal court has shed light on the nuanced implications of crypto-yield products in DeFi. The court ruled that while products promising a managed yield require a financial services license, “pass-through” DeFi products may not. In a ruling on February 9, federal judge Darren Jackson determined that Block Earner would face penalties for offering its “Earner” product in 2022, which provided yield for loans denominated in USD Coin (USDC), Bitcoin (BTC), Ether, and PAX Gold (PAXG). The judge stated that Block Earner needed to obtain an Australian Financial Services License.
An overview of the DeFi market reveals that the top 100 tokens by market capitalization had a positive week, with most trading in the green on the weekly charts. The TVL in DeFi protocols reached $63.9 billion.
Thank you for reading our summary of this week’s most significant DeFi developments. Join us next Friday for more stories, insights, and education on this rapidly evolving space.