BIS questioned the decentralization of DeFi protocols

by in DeFi News


The Bank for International Settlements (BIS) believes that projects deployed in the DeFi market cannot be called completely decentralized. The area needs government regulation, and the authorities can use the factor of centralization of each protocol to control the transactions made by users.

The bank expressed its point of view on the pages of the quarterly report. It says that researchers need to constantly monitor the activity of users in the DeFi market.

It is growing rapidly, but it is too early to talk about its decisive influence on the traditional financial sector. But in the long term, such a problem may arise if states do not develop a regulatory framework for ecosystems representing decentralized financing.

Trending: Stake, Mint, and Get Access to Yield Farming with WEWE Global

The lack of banks in the DeFi market will pose risks to financial stability in the future, as the protocols may have security and liquidity issues.

The regulators will be helped by the actual centralization of each project, since it will be possible to influence it through the developers, the bank stressed.