Global Defi Crackdown!! Crypto Report You HAVE To See!

U.S Regulators have been cracking down On crypto and it looks like the rest of The world could follow suit that's Because the FSB will be publishing its Global standards for crypto regulations In the coming months its recent defy Report gives us a taste of what's coming Today I'm going to tell you everything You need to know about the FSB summarize Its recent defy report and tell you Exactly what it could mean for the Crypto Market Thank you Boost with Russia's version of the CIA The financial stability board or FSB is An international organization which as The name suggests is supposed to ensure The Global Financial system remains Stable The FSB was established in 2009 by G20 Countries in response to the 2008 Financial crisis Believe it or not but the FSB is hosted And funded by the bank for international Settlements or bis For those unfamiliar the bis is the bank For central banks and it has recently Been helping central banks around the World develop their Central Bank digital Currencies or cbdcs the bis is very Anti-crypto Like many other unelected and Unaccountable organizations the fsb's Regulatory recommendations tend to

Become law in its member countries even Though the FSB doesn't have any legal Powers per se over 20 countries are Members of the FSB basically the G20 Plus a few others unlike many other Unelected and unaccountable International organizations the FSB Outright admits on its website that its Regulatory recommendations become law in Member countries quote the policies Developed in the pursuit of this agenda Are implemented by jurisdictions and National authorities the FSB website Also specifies the three steps for Addressing perceived risks to the Financial system the first step is Monitoring potential risks the second Step is developing policy for these Potential risks and the third step is Tracking the implementation of the fsb's Policies in member countries it seems That the FSB first started to monitor Cryptocurrency in 2016 and this is Because of reforms made to the Organization in 2016 which included Monitoring Financial Innovations for Potential Financial stability risks the Fsb's interest in crypto increased again In late 2021 and early 2022 this was of Course due to the massive growth of the Crypto Market which hit a market cap of Almost 3 trillion dollars February 2022 was when FSB chairman Class not officially stated that crypto

Could pose Financial stability risks However it wasn't until the implosion of Terror last May that the FSB started to Move towards developing actual policy to Address perceived Financial stability Risks posed by cryptocurrency G7 countries reportedly pressured the FSB to publish crypto policy Recommendations ASAP last October the FSB began taking public comments for its Proposed crypto regulation framework in A November video a managing director at The FSB revealed that there would be Additional public Outreach in q1 this Year and the finalized crypto regulation Framework will be published by the FSB In July Although it's not currently clear what The fsb's finalized crypto regulation Recommendations will look like plus gave A few Clues during a panel discussion at The world economic forum's Davos Conference which we covered in another Video class revealed that the FSB has Been more focused on crypto lately class Also explained that the FSB is planning On using quote bans isolation and Regulation to address the financial Stability risks apparently posed by Crypto he seemed to imply that the FSB Wants to ban stable coins and seem to Suggest that the fsb's framework will Target crypto-friendly countries Additional clues about the fsb's crypto

Framework can be found in its recent Report about the financial stability Risks of D5 not surprisingly the FSB is Concerned about defy because of stable Coins a few days after the report was Published class said most existing Stable coins won't meet the fsb's Criteria so with all that context in Mind let's unpack that report The fsb's D5 report is titled quote the Financial stability risks of Decentralized Finance I'll leave a link To the full report in the description if You're interested note that I'll be Sticking to the stuff that stuck out to Me for the sake of time and Sanity Now the report begins with a short Summary wherein the authors highlight The fact that defy has so far been Mostly quote self-referential meaning it Doesn't really interact with the Financial system The Only Exception is Again stable coins which you'll know are Backed mostly by U.S government debt the Authors argue that Defy is really no Different from Trad fire and therefore Call for the quote same risk same Regulation principle that's been Parroted by many world economic Forum Affiliated individuals and institutions As expected the authors take it one step Further by arguing that the crypto used In defy has no value Of all the obvious issues the authors

Identify the only one that's worth Repeating is issues around governance in D5 take a second to consider that less Than one percent of D5 token holders Have more than 90 percent of the Government's power according to chain Analysis if that's not centralization Well I don't know what is you can learn More about what decentralization looks Like using the link in the description I Digress What's fascinating is that the fsb's Concerns about defy have less to do with Things like stable coins and Centralization and more to do with its Potential to grow in the future I take This as a tacit admission that the Authors know defy will challenge Tradfite which is something the FSB Doesn't want What's ironic is that the authors claim That defy lacks transparency this is Ironic because almost all D5 Transactions are publicly viewable it's Also ironic because the traditional Financial system is much more opaque and Continues to be Ground Zero for illicit Financial activity despite all the Regulations The authors go on to reveal that they Are currently monitoring d5's Financial Stability implications recall that this Is only the first of three stages in the Fsb's policy rollout process the authors

Note that they will eventually work with Regulators to set defy specific Regulations but they don't say when what They do say is that these D5 specific Regulations will focus on any Connections between tradfi and defy These include stable coins and Centralized exchanges this begs the Question of whether the FSB will try and Make it more difficult for you to say Withdraw eth to go use a decentralized Exchange Regardless the second part of the report Provides a brief introduction to defy The authors admit that in defy the role Of traditional financial institutions is Replaced by immutable smart contract Code which is completely transparent They even admit that Defy is a quote Alternative and competitor to tradify The authors point to terror's death Spiral and ftx's collapse as two events Which shook the defy ecosystem they Failed to mention the fact that most D5 Protocols continued to operate as normal Despite all the crypto Market volatility This is something that not even Centralized exchanges can do the authors Stress that Regulators around the world Must work to address gaps in defy Related regulations for reference most Of the crypto regulations we've seen Announced by countries so far pertain to The crypto Market in general these

Regulations have mostly emitted defy and Nfts now the end of the introduction Refers the reader to appendix 1 if they Want to understand how D5 protocols work I couldn't help but notice that these Infographics use what looks like Celsius's cell token kucoin's KCs token And tethers usdt call me crazy but I Think they're trying to send a signal Here in any case the third part of the Report provides some more background About D5 the author's explanation is Surprisingly straightforward defy Consists of four things a blockchain Smart contracts D5 protocols which are a Combination of smart contracts and defy Dapps which are the front end The authors underscore the fact that Many D5 protocols were funded by VC Investors who got a huge share of Governance tokens in return they also Underscore the fact that the developers Of these D5 protocols also tend to Retain a significant stake of governance Tokens for themselves not good After arguing that Defy is almost the Same as tradfite the authors talk about The importance of ethereum and Centralized stablecoin issuers like Tether and circle in D5 they argue that D5's appeal came from its high yields Which have since come down meanwhile Yields in tradfi have gone up The only difference the authors see

Between defy and tradfi is that defy has The following features smart contracts Instead of intermediaries digital tokens For fees protocol composability Self-custody price oracles and Blockchain bridges external dependencies And on-chain governance Now what you're looking at here is how The FSB sees defy in relation to the Existing Financial system and all the Individuals and institutions involved It's quite chaotic but appears accurate The only correction I'd make is that a Centralized exchange isn't required to Get your hands on eth peer-to-peer Trading does exist after correctly Pointing out that truly decentralized Governance makes it difficult for D5 Protocols to adjust the authors unpack The products and services provided by Defy these include borrowing and lending Trading Asset Management synthetic Assets and margin trading sounds about Right The fourth part of the report Dives Deeper into the vulnerabilities of Define and the authors identify for These are quote operational fragilities Liquidity and maturity mismatches Leverage and interconnectedness The interactions of these and other Factors can be seen in the image here Now to clarify operational fragilities Include issues related to governance

Blockchains smart contracts and oracles Liquidity and maturity mismatches Basically mean Bank runs and the authors Use Terror as an example leverage means Debt such as using eth as collateral to Borrow or trade crypto Interconnectedness is where things get Interesting that's because the authors Argue that the entire defy ecosystem Hinges on the four largest D5 protocols Due to their interconnectedness They once again point to Terror as an Example of what can happen to the defy Ecosystem if one of these protocols Fails The authors also argue that centralized Exchanges can destabilize defy if they Start to play too big of a role in its Ecosystem this is a valid concern Because it's easier for the average Crypto user to access D5 via a Centralized exchange rather than go to The protocol directly this leads to a Concentration of liquidity now as far as Other vulnerabilities go the authors Identify Market Integrity AKA Market Manipulation regulatory Arbitrage AKA no Regulations and cryptoization aka the Adoption of crypto by countries the Third one seems to be a real concern With the FSB because it involves crypto Taking over Fiat money this seems Inevitable considering that central Banks will be allowed to hold crypto on

Their balance sheets from January 2025. This was announced late last year and in My opinion it's the most significant Crypto headline to date you can learn More about that using the link in the Description Anyways the fifth part of the report Talks about the quote interlinkages and Transmission channels between defy and Tradfi the authors identify for direct And indirect exposure to defy by Trad File confidence effects wealth effects And the use of crypto for payments and Settlements for direct and indirect Exposure to defy by tradify the author's Focus on defy lending Market making the Issuance and custody of stable coins and Stablecoin lending to Banks the authors Pay extra close attention to the Tokenization of other real-world assets Besides stablecoins as an area of Concern the authors are also concerned About the fact that institutional Investors continue to be interested in Crypto and D5 despite the market crash It's amazing to see the FSB admit this But I suppose this interest may start to Decline as Regulators continue to crack Down on the crypto industry in the US More about operation choke point 2 in The description moving on Now for confidence effects this seems to Be a reference to the adoption of defy By Regular People it sounds like the FSB

Is concerned that people could start Investing in crypto and defy instead of The traditional Financial system the Authors sound relieved that retail defy Adoption has been low for now oddly Enough it seems that the author skipped The part about wealth effects and went Straight to crypto payments which they Say have likewise yet to take off what's Scary is that they discuss decentralized Stable coins like die and frax Suggesting they could be targeted by Defy regulations After talking about the collapse of FTX For the dozenth time the authors outline Three scenarios for defy Evolution the First scenario is that defy continues to Be a relatively small crypto niche in Which case the FSB isn't worried about Any Financial stability risks as Trad Fire connections would be limited the Second scenario is that D5 becomes a Part of mainstream Finance which is the Outcome that the FSB is concerned about That's why the authors seem to be fans Of the third scenario which is where Defy dies but all the amazing crypto Innovations remain for corrupt trade Fire institutions to exploit This ties into the sixth part of the Report which is about how the FSB plans To monitor the evolution of D5 the Authors start by reiterating that Getting quality data out of Defy is an

Issue They say this is because defy data is Hard to analyze users are pseudonymous And there are lots of off-chain Transactions they also say there's a Lack of reporting in defy and that D5 Protocols are incentivized to manipulate Their data well I guess they missed the Memo that does lots of defy data kyc on Exchanges means that it's easy to Identify users on-chain data can't be Faked and off-chain transactions are not A part of D5 funnily enough the author's Own methodology of measuring the defy Market mimics that of the popular defy Analytics platforms that almost every D5 User knows about these include tracking Total value locked the number of D5 Protocols stablecoin market cap and the Number of active D5 users In terms of tracking vulnerabilities the FSB plans to focus on the concentration Of governance token ownership outages of Infrastructure providers like oracles Liquidity issues in D5 protocols levels Of Leverage and the concentration of tvl In the largest D5 protocols plus their Interconnectedness When it comes to tracking interlinkages And transmission channels the FSB plans To focus on quote banks with business Models tailored to the crypto asset Market and the participation of Institutional investors in D5 in case

You haven't noticed the Crackdown on Crypto banking has already begun Now this relates to the seventh and Final part of the report which is the Conclusion The authors conclude by repeating that Defy does not differ significantly from Tradfi especially because most D5 Protocols tend to be centrally Controlled by a small group of Governance token holders typically the VCS and the team The authors repeat that the FSB plans on Monitoring d5's Evolution especially When it comes to tokenizing real world Assets the FSB will also work closely With regulatory bodies to keep track of How interconnected D5 is with the Traditional Financial system and Consider defy specific regulation The authors repeat that focusing on Entry points to the D5 ecosystem will be A good way to keep it in check Especially stable coins and centralized Exchanges they hint that stable coins And centralized exchanges could be Subject to additional regulatory burdens If they offer access to defy yikes This then brings me to the big question And that's what the fsb's D5 report Reveals about its upcoming crypto Regulation recommendations in short it Suggests that these regulations will Focus on separating crypto from the

Traditional Financial system something Which is already starting to occur in The USA this is no coincidence because Unelected and unaccountable International organizations such as the FSB tend to follow the US's lead The idea is to impose the same Requirements on other countries so that There is no regulatory Arbitrage or Rather so that they don't adopt crypto And challenge the US dollar the thing is That not all countries seem to be on the Same page as the US when it comes to Crypto besides the fact that the fsb's Regulatory recommendations will only be Rolled out in a couple of dozen Countries some of these jurisdictions Including the UK and the EU have gone Ahead with creating their own crypto Regulations if you've watched any of our Videos about their proposed regulations You'll know they're surprisingly Pro Crypto as I've mentioned in other videos This abnormal openness to crypto from us Allies seems to have its roots in Geopolitical issues and disagreements Speaking of which countries like Russia And Iran are reportedly starting to Adopt crypto for international trade if Superpowers like China follow suit Crypto could very well threaten the US Dollar Supremacy in international trade This is something that organizations Like the IMF have not so subtly admitted

Concerning D5 specifically I think it's Clear that the FSB plans on targeting Any D5 protocols where VCS and the team Are in control via governance tokens the Bad news is that most D5 protocols fit This profile the good news is that the Ones that don't are truly decentralized And should be immune well this all Depends on how hard the FSB goes after Stable coins judging by classes comments They're going to throw the kitchen sink At this crypto Niche and this makes Sense when you remember that the FSB is Overseen by the bis and the bis sees Stable coins as direct competitors to Their dystopian cbdcs note that you can Learn about the difference between Crypto and cbdc's using the link in the Description In some then I expect the fsb's crypto Regulation recommendations to look as Aggressive as the ongoing crypto Crackdown in the United States however I Don't think most countries will follow The fsb's lead be it because of Geopolitics or the desire to attract a Multi-trillion dollar industry to their Jurisdictions with a bit of luck the Fsb's crypto regulation recommendations Will reflect the reality that the US and Its allies will be left behind if they Don't come up with reasonable crypto Regulations this is something the entire Crypto industry has been warning U.S

Officials about for months so let's hope They finally listen Thank you all for watching folks and I Will see you in the next one [Music]


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