The ecosystem of bitcoin (BTC), cryptocurrencies, and decentralized finance (DeFi) is “like the internet in its early days.” So believes Sergej Kunz, co-founder of the decentralized exchange 1inch. His words were pronounced in a panel of the Blockchain European Convention, which was held this week virtually.
Kunz explained that in the early stages of the Internet, few people expected it to be as useful and open as it is today. According to him, the same will happen with decentralized finance. The developer is hoping see them grow not only as an alternative system but also within the main financial system.
The conversation “DeFi: The Future of Finance” also included Donald Thibeau, co-founder of the HBAR Foundation; Laurent Marochini, director of the financial company Société Générale; and Maximilian Bruckner, from the International Association for Token Standardization. The latter acted as moderator of the panel.
Marochini was present as an ambassador of the fiat system in the aforementioned debate. Société Générale is a traditional financial company founded in 1864 with a presence in 80 countries. It is the seventh largest company in the Eurozone by market capitalization.
The manager of the banking group is open to decentralized finance, which he does not see as a competition, but as an evolution. Estimate that in 10 years the use of some DeFi products by the traditional system will be common, for example, stablecoins.
Banking sector representative calls for regulations for DeFi
According to Marochini, what DeFi lacks for its massive adoption by the financial system is more regulation. He recounted, as an example, that on one occasion — years ago — he had a problem with his credit card due to a hack. The bank was able to solve the problem for him and reverse the illicit transactions that had taken place.
For him, it should be possible to do the same with DeFi. It is worth clarifying that transactions with cryptocurrencies are not reversible. Then, the closest thing to the executive’s wishes would be a system in which the participants were identified, as well as their addresses.
CriptoNoticias reported that there are already decentralized finance platforms that, in order to be accepted by institutional investors, have begun to implement registration processes and comply with KYC policies (know your client).
Many cryptocurrency users criticize this and consider that these platforms are no longer decentralized. Bitcoin, crypto assets and – in general – DeFi, are often associated with an ideology of financial freedom and privacy in which providing personal data to a platform is usually not something desirable.
Regardless, regulatory attempts on the cryptocurrency ecosystem are constantly advancing. And, like it or not, that regulated environment is what allows traditional finance to add bitcoin-related products to its portfolio.
More and more banks are looking to bitcoin
This medium has reported numerous banks in various parts of the world adding custody services for crypto assets, in addition to buying and selling, in order to satisfy the demand of its customers.
Among these financial institutions is, for example, the Bank of New York Mellon, the oldest in the United States, which offers BTC custody services for its clients. Also in Europe, the French bank CACEIS is preparing to offer the safeguard of crypto assets to those who request it.
The clients of these entities are usually large institutional investors, who prefer to cede custody of their BTC to third parties, instead of assuming the responsibility of storing them in a self-custodial wallet.