The crypto industry has faced challenges in 2022 resulting in significant drops
in value of assets year to date. Factors such as incidents like the Terra crash
and bankruptcies of lenders like Celsius
and fund failures like Three Arrows Capital
have contributed to increased volatility. Unfortunately, these events impacted investors negatively due to risk management and unsustainable business practices. As a result, regulators decided to intensify their scrutiny of the industry. Janet Yellen (US Secretary of Treasury) has called for stablecoin regulations while G7 finance ministers are urging the Financial Stability Board to strengthen regulation.
Both Europe and the US are making strides, toward implementing regulations as digital assets undergo significant changes. In Europe, the Regulation on Markets in Crypto Assets (MiCA) has been introduced to establish a legal framework for digital assets. It focuses on asset-referenced tokens, stablecoins, and other types of assets. BlackRock
, the world's biggest asset manager, is showing a keen interest in DeFi and its potential impact on the financial industry. According to Joseph Chalom, Head of Strategic Alliances at BlackRock, the company is exploring opportunities that arise from the DeFi sphere.
However, Chalom believes that it may take years before institutional adoption becomes widespread. Nonetheless, he remains optimistic about the future of DeFi and companies like Coinbase playing a vital role in connecting DeFi with traditional investors.
BlackRock is also closely examining tokenization and how reserved stablecoins can influence institutional funding flows. While there are hurdles to overcome Chaloms perspective indicates that BlackRock is prepared to embrace both the challenges and opportunities presented by DeFi.