Regulators Target The Booming DeFi Space

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The crypto market that all started off as a mode of payment and store of value has thrived in several other domains within the financial world. One such notable example is Decentralized Finance (DeFi). As the name pretty much explains, DeFi offers financial products, including lending, borrowing, etc., in a decentralized format.

With a gradual start in the beginning due to lack of knowledge among people, it has now taken an exponential turn with billions of dollars locked in different protocols. And currently, DeFi is the largest growing ecosystem in the crypto industry.

But the ecosystem is now being examined by the regulators – causing slight fear among the users despite the faith in this booming industry.

An Educational Event for Financial Regulators

In the previous week, few private video calls were held between the financial regulators and some leading start-ups in the DeFi industry to educate the officials about the same industry.

The event was hosted by the International Organization of Securities Commissions, as reported by Financial Times. It featured Uniswap, a Decentralized Exchange (DEX) and derivative trading platform, and Representatives from the US Securities and Exchange Commission (SEC) and the US Commodity Futures Trading Commission (CFTC). As mentioned, the conference aimed to educate the regulators on the DeFi technology.

Decentralized Finance is Here to Stay

Attorneys and proponents in the crypto space have asserted that the DeFi industry has left the officials unwary. Additionally, they have also questioned the functioning of the current financial regulation.

The lawyers claim that the DeFi ecosystem is the highest profiled efforts to evade the traditional financial system. In fact, the decentralized form of finance has immensely helped systems to extend from digital currencies to bonds, insurance, trading and savings account.

What do the Regulators have to Say?

In the conference, Gary Gensler, the chairperson of the US SEC, cited that the DeFi protocols are causing numerous challenges for investors as well as regulators. Moreover, Dan Berkovitz, the commissioner of the US SEC, indicated that the decentralized applications could have legality concerns.

Responding to the comments made by the regulators, Lewis Cohen, a partner at DLx Law, says that everything is happening at a commendable rate in the industry, though the regulatory bodies are unable to react to it in a practical manner.

But Losco’s representative declined to comment, as the representative believed that the meeting was organized to support internal work.

DeFi Fights Back Strong

While many crypto investors and enthusiasts were sceptical about how the event could pan out and what regulations could it bring to the booming DeFi space, however, surprisingly, things seem to have worked in favour of decentralization.

DeFi protocols have claimed to positively welcome clear guidance from regulators. But some experts guess that increased oversight could leave an existential threat to the decentralized finance industry. Law enforcement has to date traditional observed activities through intermediaries and concludes that DeFi makes it unaccountable.

Effect on DeFi Tokens’ Price

The price of the token is a direct reflection of the performance of the protocol. Based on the above discussion, let us understand if the event was able to hinder the price action of few top DeFi cryptos.

Uniswap (UNI)

Uniswap is the largest crypto in the DeFi space, with a market cap of $10 billion. It is indeed one of the most successful DeFi projects to exist.

Like other cryptos and industries, UNI token too plunged in mid-May. However, the recovery game has been on an impressive side. While several cryptos failed to hold at the Daily TT Support level, UNI seems to be holding well above it.

The latest S&R did react off strong by pushing the market down to the Support but stood unsuccessful in making a new low. In fact, one can argue for a higher low as well.

Currently, following the entire crypto market, the price is inching higher up to the S&R., And a reaction from the sellers at the S&R will illustrate better clarity on the future price action.

Aave (AAVE)

Though Aave crypto belongs to the DeFi ecosystem, the price action is out of sync relative to the Uniswap token.

Considering the recent price action, the market is clearly in a downtrend with successive lower highs and lower lows.

Currently, the market is retracing to the second push down from the bears. And of no surprise, the pullback began from the Support of the Daily TT, as shown. Unlike UNI, the market visually looks like it did make a low below the Support.

That being said, with the strong buyers showing up in the Daily TT buyer’s area, Aave can reach up to the S&R before it turns to the sell-side again.

Clearly, the price is following the technical analysis and looks unaffected by the event with the regulators.

Now you can buy your favourite DeFi with just a click from our list of reputed cryptocurrency exchanges. Cheers!

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