They’re CRACKING DOWN on DeFi! This Report Reveals It All!

Unaccountable and unelected International organizations have an Uncanny amount of influence over our Daily lives with their so-called Regulatory recommendations which are Often implemented globally just recently An international organization consisting Of most of the world's Securities Regulators published their so-called Recommendations about how defi should be Regulated today we're going to summarize These recommendations and tell you you What they could mean for the crypto Market spoiler alert they were crafted Under the leadership of the SEC it's Safe to say that this is a video you do Not want to Miss the report we'll be summarizing Today is titled quote final report with Policy recommendations for decentralized Finance it was published by the International organization of Securities Commissions or iosco late last year and We'll leave a link link to the full Document in the description if you're Interested now as I mentioned in the Introduction this particular report was Put together under the supervision of The United States Securities and Exchange Commission or SEC for those Who've been living under a rock the SEC Has been going after the crypto industry Ever since Gary gendler a former Goldman Sachs Banker became its head in early

2021 if you've watched any of our videos About other account accountable and Unelected international organizations Such as the financial action task force Or fat F you'll know that they all seem To be closely affiliated with the United States and their so-called Recommendations almost always become Regulations around the world now in case You're wondering why I keep using finger Quotes that's because these Recommendations are not recommendations They are requirements the countries that Fail to comply with these Recommendations often find themselves in Trouble with the US and its allies now Naturally almost nobody reads the Reports that these unaccountable and Unelected international organizations Release especially when it comes to Niche topics like crypto this is Unfortunate because reading these Reports can and often does give you a Sense of what's coming to your country That's why ios's defi recommendations Are so important these recommendations Could become regulations in the Noto Distant future as with all Recommendations iosco has created a list Of nine for defi that it wishes to see Implemented as regulations around the World we'll break down what each of These recommendations are and what Practical effect they could have on the

Crypto Market in just a moment first Though we need to unpack Haack what the Authors say about defi in their report To get a better sense of where they're Coming from and why their Recommendations are wrong and by the way If you're enjoying the video so far Please do smash that like button to give It a boost now the report begins with a Brief summary wherein the authors Explain what defi is for those Unfamiliar defi is a Crypton Niche that Consists of decentralized applications That provide products and services you'd Normally find in the traditional Financial system such as borrowing Lending and saving the difference of Course is that defi is completely Peer-to-peer there are no intermediaries And that means there are no restrictions On who can use its protocols in Practical terms that means no kyc no Limits on trading on borrowing on saving On lending Etc now obviously that is big Competition for banks to be fair though The relatively unregulated nature of Defi means that it does come with its Fair share of risks hacks exploits scams Rug pools you name it in other words There is next to no investor protection And if you know anything about Regulators like the SEC you'll know They're all about investor protection at Least in theory in reality Regulators

Like the SEC often use the excuse of Investor protection to limit regular People's access to certain Financial Products and services while defi Certainly does have its faults what the SEC and other such Regulators are Calling for would effectively turn it Into another arm of the existing Financial system logically this requires Global coordination to ensure there's no Place that truly free and open Financial Services can be accessed this is stated By the authors in the summary though With much nicer wording of course quote Promote greater consistency with respect To the regulation and oversight of Crypto markets and on that note if You've been keeping up with our coverage Of crypto regulation then you'll know There's one quote that almost every Single one of these reports includes Same risk same regulation it's a Principle which as I just noted Justifies regulating crypto the same as Trafi turning them into the same thing As a fun fact this principle appears to Have its roots in the world economic Forum or we another unelected and Unaccountable international organization That's been surprisingly open about how It wants to control every aspect of Our Lives more about the we in the Description I digress hold up a second There guy sorry to interrupt folks but I

Just wanted to very quickly tell you About the coin Bureau deals page now This is the place where we have put Together some of the very best deals and Promos in all of crypto so you can think Things like exchange signup bonuses Trading fee discounts and money off of Hardware wallets and much much more Besides so if you want to check that out SL deals is the place to go or You can just use the link in the Description of this video down below Thanks very much and now back to you guy Now in the first part of the report the Authors give a bit of background about Iosco defi Regulations not surprisingly they've Been working on these for a while since March 2022 to be exact this is to be Expected given that defi saw explosive Growth during the crypto bull market in 2021 incredibly the authors reveal the Real reason why they want to crack down On defi one of the reasons why they want Global defi regulations is quote to Facilitate a Level Playing Field between Crypto asset markets and traditional Financial markets remember what I said About Banks and Competition what's interesting is that The authors use a fairly childish Framework of why what who and how in Crafting these defi recommendations by Now you'll know the why defi presents

Significant risks to investors and the Markets that is they are a risk to Established financial institutions and Their cronies the what is pretty self- Planetary borrowing and lending Protocols decentralized exchanges Probably also liquid staking protocols As we've seen it's possible that some Regulators will even go after stable Coins again anything that's seen as a Threat to the established institutions Must be eliminated or absorbed anyways The Who side is where things get Concerning as we've seen with the Crackdown on tornado cach Regulators Around the world are starting to Target Individual crypto developers not just Companies in the report the authors call For identifying the quote regulatory Touch points of defi protocols Translation Crackdown on any key players You can identify and finally we have the How which is all about how to turn these Recommendations into regulations and Then these unaccountable and unelected International organizations will turn Around and tell you that these are Nothing more than recommendations you'll Recall that these recommendations are Basically binding now in the second part Of the report the authors give a bit of Background about the defi Niche they Start with an arguably false Proclamation quote a common

Misperception is that defi products and Services are materially different from Those found in traditional financial Markets as always they're playing around Around with definitions depending on Your definition of quote materially Different then this statement could be True we would argue though that the fact That all transactions in defi occur Peer-to-peer without an intermediary Makes them materially different as Expected the authors gloss over this Fact and instead focus on the fact that It was humans that wrote the code for These defi protocols and because humans Are involved government regulations must Necessarily follow ladies and Gentlemen The Pinnacle of statist thinking anyhow Jokes Aside after some short Explanations of the most popular types Of defi protocols dexes lending and Borrowing protocols and aggregators the Authors provide their quote Enterprise Level Viewpoint they seem to argue that All of defi is inherently connected to Larger corporate structures to be fair a Lot of defi protocols do have private Companies and nonprofit foundations that Build and maintain their backends and Front ends however most defi Protocols Are purposely designed such that even if You were to wipe these entities off the Face of the Earth they would continue to Operate as is the authors also include

Dow token holders as part of their Enterprise level Viewpoint for reference Most defi Protocols are governed by Decentralized autonomous organizations Essenti Decentralized communities where all Changes are voted on by those who hold The governance tokens of the protocol Now this is more significant than you Think because it foreshadows a scenario Where Regulators start to Target the Holders of these government tokens at Least the Wales to put things into Perspective fewer than 1% of Dow token Holders hold 90% of the voting power According to a report from the summer of 2022 now now if you thought that was Crazy the authors appear to include Miners And validators as part of their Enterprise level Viewpoint too they Specifically note quote service Providers oracles Bridges and minor Validators as stakeholders in defi Protocols who could apparently be held Accountable if this sounds familiar That's because an anti-crypto politician In the United States named Elizabeth Warren is in the process of trying to Push through a bill which would do Exactly that and more it would require All participants in crypto to conduct Kyc on all users and interactions even With crypto wallets heck even iosco Doesn't go after the wallets then

Following a recap of tera's collapse Usdc D pegging and all the illicit Financial activity that's allegedly Being done via defi the authors tacitly Admit that Securities Regulators around The world don't have the expertise to Address this crypto Niche and don't Think they can get enough quality data To do it properly make no mistake though That won't stop them from trying and This brings us to the third part of the Report which is where those nine defi Recommendations come into play the Authors start by saying that quote iosco Is issuing these policy recommendations To help iosco members apply relevant Existing iosco standards through their Own regulatory Frameworks as appropriate To defi products Services activities and Arrangements within their jurisdictions Note that ios's members include almost Every Securities regulator in the world Notably these authors note that these Recommendations should be factored into Existing defi regulations in countries Where they already exist so if you think You're safe because you're doing in a Country with good defi regulations think Again chances are those regulations will Change fairly soon for Securities Regulations specifically the authors Instruct Regulators to look for anything That could be classified as a Securities Offering not just governance tokens if

You watched our video about the sec's Lawsuit against coinbase you'll know That it considers staking to be a Securities offering let that sink in And last but not least the authors Instruct Regulators to be on the lookout For any individuals and institutions That could be held accountable for Operating a defi product or service I'll Remind you that this could very well Include the likes of oracles Bridges Miners and validators truly terrifying Stuff so this relates to the first Recommendation and that's to analyze dii Products and services to assess what the Appropriate regulatory response should Be or can be given the arrangement the Authors say that Regulators should look At where key individuals and Institutions are based to assess what's Appropriate then Regulators ought to Look at these defi protocols through the Aforementioned Enterprise level Viewpoint which includes the scrutiny of Miners and validators and all of that And here they go one step further by Telling Regulators to try and dig deep To the technical level of the blockchain If possible as a not so fun fact the Eu's recently passed data act contains a Provision that could theoretically Require all smart contracts to include a Kill switch how much do you want to bet That this will be applied to defi

Protocols to ensure compliance with These so-called Recommendations anyhow speculation aside The second recommendation follows from The first first and that's to identify Responsible persons which includes Companies by the way if you're wondering What that means the author say it's Anyone who has quote sufficient Influence over a defi protocol more Definition Shenanigans what's scary is That the authors throw the concept of Decentralization out of the window they Say that no matter how decentralized a Defi protocol is quote there is usually A responsible person or persons that Controls or sufficiently influences the Offer of products provision of services Or engagement in activities a modernday Witch Hunt if you will as a cherry on Top the authors point the finger at Dows As entities that could potentially be Held accountable and seem to imply that This is the case regardless of how the Governance token distribution looks like This provision could open the door to Regulators going after regular defund by Dow participants the authors then Provide a list of potentially Accountable entities which you can see Here as you can see it explicitly Mentions Dows or participants in Dows in Addition to Founders those with the keys To the smart contracts of the defi

Protocols and apparently even Dow Governance token holders Yikes the nightmare continues with the Third recommendation which is to Standardize defi regulation at a global Level as you might have guessed the Authors spend multiple paragraphs Explaining why every single country Around the world must fall into line and Turn these recommendations into Regulations investor protection Market Integrity defi connections to trafi defi Intermediaries wherein the authors imply That all defi Protocols are Intermediaries the list goes on it Consists of the insanity you might Expect and ends with a note that Cryptocurrencies themselves could be Guilty of violating the regulations Seriously quote layer one blockchains Could themselves be carrying out Clearing and settlement activities this Ties into the fourth recommendation Which is to require identification and Identify conflicts of interest what's Fascinating is that the authors make no Mention of kyc to use defi rather they Call on Regulators to force responsible Persons to identify themselves and their Conflicts of interest this is Fascinating because it could be evidence Of the fact that Regulators around the World know that they would never succeed In getting defi protocols to enforce kyc

Until they've actually identified the People who could Implement such a Requirement for some defi protocols this Will never be possible that said the Authors do include a footnote which References the fat FS k YC and AML Recommendations if you've watched any of Our videos about the fat F's Recommendations you'll know that their Endgame is to make any truly crypto Activity such as defi illegal by Labeling it as high risk oddly enough The fifth recommendation continues the Theme of going after responsible persons This time it calls for identification of Plus the addressing of risks including Technological and oper ational risks the Provisions of this recommendation are Predictable but their scope is Unprecedented for example it includes Scrutiny of minor or maximal extractable Value aka me wherein Miners and Validators have the ability to rearrange Transactions in blocks to their benefit It also includes oracles and bridges as Well as smart contract audits but that's Pretty standard stuff even in the crypto Industry lo and behold recommendation Six is about responsible persons too it Requires them to provide clear complete And accurate disclosures this is pretty Standard stuff from a Securities Law Perspective relevant products and Services have to provide this

Information and it's honestly not a bad Thing the thing is that these Disclosures are often independently Verifiable in the case of defi that is Anyone can check to see what's going on In defi using a blockchain Explorer as These and other analytics tools have Become more advanced it's become quite Easy to see when something's not quite Right this just underscores the fact That defi Protocols are not entirely Analogous to trfi products and services Which do not have this degree of Transparency and lie in their Disclosures sometimes too now the Seventh recommendation is a lot more Broad and that's to enforce applicable Laws on defi not much else to note Really just that the authors tell Regulators that defi Protocols are Purposely designed to evade regulations So they'll have to be creative in how They crack down on them recommendation 8 Is similarly redundant and that's for Regulators around the world to share the Information they have about defi that's Because they need to make sure that no Defi protocol escapes their grasp they Want to know where all those responsible Persons are and how to get at them now The ninth recommendation is a lot more Interesting and that's to examine the Connections that defi has to the rest of Crypto and to trafi the elephant in the

Former room is liquid Stak cryptos Mainly liquid staked eth and in the Latter room it's stable coins mainly Usdc news flash but liquid Stak tokens Are extremely popular as has collateral In dii that's simply because you can Earn an interest on the collateral You're borrowing against depending on Interest rates and market conditions This means that you can borrow for an Indefinite period and not get liquidated If you watched our video about Stablecoin market caps then you'll know That usdc is mostly used in defi another Popular stable coin in defi is D which Is decentralized on paper but in Practice is now sign significantly Backed by US Government debt a Regulatory touch point from ios's Perspective it goes without saying that Any issues with liquid Stak eth usdc or D would have a terror level effect on Crypto's defi ecosystem just a few more Tail risks to keep in mind so this Brings me to the big question and that's What all of this means for the crypto Market well the answer is Threefold first it's like likely to Restrict the potential of Defi and its Tokens which is one of the reasons we Believe that it won't be one of the big Narratives of the next crypto bull Market at least not initially more about That in the description by the way

Moving on now the second impact these Defi recommendations will have on the Crypto Market will be to make developers More nervous about building anything That could be construed as a financial Product or service the consequence of This is that we could see more Non-financial use cases emerge in crypto And this pertains to the third impact And that's that these defi Recommendations will force existing defi Protocols to decentralize as much as Possible the silver lining in all of This is that Securities Regulators Around the world seem to recognize that Cracking down on defi is going to be Very difficult although they may succeed In cracking down on some defi protocols There are likely many that will survive The restrict s that are coming those That don't will likely be forked and Revived just like some people are trying To do with tornado cach after all crypto Is open source everything can be rebuilt Now believe it or not but these defi Recommendations will likely benefit Crypto in the long run once they become Regulations besides increasing the Decentralization of existing defi Protocols the explosion in non-financial Use cases could set the stage for some Serious Mass adoption if you're at all Familiar with defi you'll know that some Of these Protocols are truly Cutting

Edge with developers such as y finances Andre cronier being recognized Industrywide Now imagine what will happen when these Talented defi developers start to shift Their focus to other products and Services it will inevitably result in Killer daps that will supercharge Crypto's adoption overall and this will Increase the the pressure on Regulators Around the world to pass more favorable Crypto regulations if you've been Keeping up with our coverage of crypto Regulations you'll know this has been a Key theme initially crypto regulations Are likely to be restrictive and Damaging but the even bigger byproduct Will be more individual and Institutional adoption over time this Adoption will reach a critical mass That's able to exert more influence over Regulators than big Banks and other Finan fincial incumbents can and come to Think of it the impending spot Bitcoin ETFs could be proof that this process Has already Begun and that's all for today's video Folks so if you learned something new Let us know by Smashing that like button If you want to keep learning be sure to Subscribe to the channel and ping that Notification Bell if you want to help Others learn take a second to share this Video with them whether you're planning

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