The future’s global. The future is DeFi


It has been clear for a few months now that a sea change is well and truly underway, and that the traditional financial services sector is either going to be eclipsed by the digital, decentralized financial services industry, or will have to join it.

In terms of definition, the traditional financial services sector includes Tier 1 banks, regulators and mainstream centrally governed exchanges which operate as a counterparty in physical commodities and indices trading.

These in the past have railed against the cryptocurrency phenomenon, partly down to a wish to defend themselves against the hugely empowered new types of investor which now exists, and partly due to the inability to adapt and provide the sheer bang-for-buck that cryptocurrency provides.

This has led cryptocurrency to its rapidly evolving state, led by innovators in all areas of financial technology who have now created an entire decentralized finance ecosystem, known as DeFi.

The senior leaders of the global financial markets system and the regulators realize that this is the future, and that not only is it shaping the way the younger generation will interact with all kinds of transaction from paying for goods to signing contracts with suppliers, and from trading the multi-asset global markets to investing in new start ups, but is a genuine challenger to the traditional system.

Advocates of decentralized finance and some of its thought leaders are now banding together in order to lobby the financial markets regulatory authorities of some of the most important regions in the world for financial and capital markets, and which oversee all activity in the world’s largest and most important financial markets capitals including London and New York.

Called the Global DeFi Coalition, the advocacy movement consists of trade bodies including ACCESS from Singapore, Bitcoin Association from Switzerland, Blockchain Association from the U.S., Blockchain for Europe, CryptoUK, and International Association for Trusted Blockchain Applications (INATBA), which combined represent over 350 decentralized financial services companies across the world.

These combined trade bodies have approached the Financial Action Task Force (FATF) which is an intergovernmental organization founded in 1989 on the initiative of the G7 nations to develop policies and systems to combat financial crime, such as money laundering which was the key tenet of its establishment.

The objectives of FATF are to set standards to promote effective implementation of legal, regulatory and operation measures for combating threats to the global financial system, and in that respect, FATF is classified internationally as a policy-making body.

It is, therefore, the ideal institute to take a universally accepted request to begin the framework for the regulation of decentralized financial services and the Global DeFi Coalition’s approach is with exactly that in mind.

This is a very interesting step forward in terms of providing a sustainable future for the growth and exponential development of DeFi, and CoinMetro’s plans are absolutely in line with this, as CoinMetro has been a regulated cryptocurrency exchange since its inception, and has also an Electronic Money Institution (EMI) license in order to operate as a regulated payment processing entity, and is currently working toward operating a multi-lateral trading facility (MTF) within twelve months, marking CoinMetro out as a digital bank and cryptocurrency exchange in one.

This is the right way forward for the operational makeup of cryptocurrency and decentralized financial services operators, and therefore it is of great interest that the FATF is now in receipt of a positive set of proposals to look toward bringing the matter up with global regulators.

The FATF is keen on ensuring compliance, and that is one of the fundamental pillars of CoinMetro’s ethos. A recent update from FATF revealed that almost half of their reporting regulators had enforced KYC and CFT rules for regulated cryptocurrency entities operating in their jurisdictions, something that can best be described as good progress.

Currently, only 58 out of 128 reporting jurisdictions have adopted the FATF’s standards for regulating crypto firms, something that the industry body’s lobbyists are intending to improve by some suggested procedures which include the importance of recognizing the reduced risk of public blockchain-based transactions and therefore there should perhaps be a differentiated, risk-based approach for DeFi entities, the implementation guidelines of basic regulatory principles that can be conducted in a collaborative way with the DeFi industry and an enhanced level of cooperation and collaboration between regulators and the industry given the global nature of digital assets.

Quite simply, the mainstream financial sector is now fully aware that cryptocurrency and decentralized finance is what will modernize it and move the entire world’s markets into the future.

From El Salvador’s recent adoption of Bitcoin as legal tender, empowering 70% of its previously unbanked population and immediately including them in a borderless economy with no limitations, to the influencer-driven new technology and peer-to-peer markets that have risen to the top and involve some of the wealthiest innovators in the world, there is no doubting that, with the right adherence to proper procedure, the future is digital.