Ripple’s president, Monica Long, believes that compliance in decentralized finance (DeFi) will be the industry’s major breakthrough in 2024. In an interview with Cointelegraph, Long stated that previous hype cycles driven by initial coin offerings and nonfungible tokens will be replaced by real-world usefulness on a large scale, which necessitates compliance, usability, and integration with existing systems.
DeFi represents a shift from conventional, centralized financial systems to peer-to-peer finance facilitated by blockchain technology. As of now, the sector has a market capitalization of $79.5 billion, according to data from CoinGecko. It is no surprise that DeFi has attracted the attention of regulators worldwide due to potential compliance implications with existing financial laws.
The United States is taking measures to increase oversight of cryptocurrencies and DeFi. New regulations implemented by the Securities and Exchange Commission redefine the terms “dealer” and “government securities dealer,” requiring more market participants to register with the regulator.
Monica Long, president of Ripple, believes that DeFi regulation is an area that is “ready for innovation this year.” She argues that compliance is non-negotiable for the industry as a whole. However, applying existing rules to DeFi use cases, such as decentralized exchange trading, remains a challenge. Long sees this as an opportunity for innovation in the coming year.
According to Statista, the average revenue per user in the DeFi market is projected to reach $1,378 by 2024. Most of this revenue will come from decentralized exchanges (DEXs), platforms that allow users to trade cryptocurrencies without a central authority. Uniswap, one of the most popular DEXs, has generated nearly $10 million in fee income for its liquidity providers in the past week.
Long predicts that compliance will drive real usefulness and widespread adoption, which requires integration with existing infrastructure and systems. She argues that the way forward is a harmonious combination of compliance and innovation.
Long emphasizes the importance of understanding the foundations and history of the problem in order to transform how society moves, manages, tokenizes, and stores value.
In the US, proposed crypto regulations are being driven by lawmakers’ fear and doubt, as reported by the magazine.