Fed: DeFi Sector is a Potential Threat to Financial Stability
Main page Opinion, DeFi
Hot topic
Sept. 5, 2022

According to experts from the US Federal Reserve (Fed) research group, the DeFi sector can create long-term risks to financial stability due to the growing capitalization of the crypto market.

According to the regulator's analysts, the threat is related to the lack of clear rules for regulating decentralized applications (dApps). In a published study, these have highlighted the sector has not yet become "systemically important," but government departments should pay more attention to it.

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According to the paper:

"The rapid growth in the role of such blockchains suggests that policymakers should start giving serious consideration to a full range of financial stability issues that could arise should such activities become systemically important."

The Fed has stressed regulators do not have the necessary tools to enforce laws and regulations in the DeFi sector. According to the regulator's experts, industry players "will take advantage of any and all profitable opportunities regardless of supervisory concerns."

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