The World Economic Forum (WEF) launched a decentralized finance (DeFi) policy maker toolkit, providing regulators with a guide to adopting DeFi.
The World Economic Forum created the toolkit in collaboration with the Blockchain and Digital Asset Project at the Wharton School of the University of Pennsylvania.
It includes contributions from academics, lawyers, DeFi entrepreneurs, technologists, legislators, and global regulators.
This is the second such report from the WEF, after its initial launch, DeFi Beyond the Hype.
Interest in cryptocurrencies and DeFi increased significantly during the pandemic, leading to an acceleration in investment.
According to the report, the value of digital assets locked in DeFi smart contracts it increased 18 times in the last year, from $ 670 million to $ 13 billion.
In addition, the number of associated user wallets multiplied by 11, from 100,000 to 1.2 million, and the number of related apps grew from 8 to more than 200.
Fundamental Understanding of DeFi for Policymakers
In light of this growing adoption, the WEF recognizes the industry’s potential to transform the financial systemTherefore, the toolkit includes several policy proposals to help mitigate its risks.
First, it provides a fundamental understanding of the factors important to policy makers.
It also provides an overview of DeFi, while exploring and illustrating its benefits and risks with case studies.
In addition to industry experts, the toolkit also includes contributions from government representatives from around the world.
These include those developing Europe’s Crypto Asset Markets (MiCA) framework, as well as major US financial regulators.
In particular, the government of Colombia is explicitly planning to use the toolkit for its policy and regulatory formulation.
Jehudi Castro Sierra, Digital Transformation Advisor to the Presidency of Colombia pointed out:
“We are pleased to contribute to the toolkit and look forward to using it to inform balanced, risk-aware and forward-thinking approaches to this space. […] As the first country in the region to use the Policy Maker Toolkit, we aim to be the Latin American leader in DeFi policies and regulations ”.
With the recognition of a global and influential institution like the WEF, DeFi seems to be on the cusp of understanding and acceptance.
Galaxy Digital CEO Mike Novogratz made similar proposals recently, Saying Adoption Will “Explode” Once Regulatory Issues Are Resolved.
The toolkit is a step forward for governments to understand the new paradigm and adapt to it appropriately.
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