REGULATORY CLARITY FOR CRYPTO

There is a lot of potential that there will be a lot of regulations in 2023 and most of the regulation will probably be good but a few of them will be bad. Crypto regulations will likely vary from region to region despite the attempt to create global crypto rules. The finalized crypto regulations will be released something early next year. Although they won't be coming into force for another one to two years after that, they will give institutional investors regulatory clarity for crypto.

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You should know that the absence of regulatory clarity is the main reason why, the institution has been hesitant to invest in crypto, especially altcoins. The establishment of regulatory clarity in the EU and else could therefore result in lots of inflows and contribute to the first quarter recovery to crypto. You should know crypto regulations will effectively force projects to decentralized. This is because the only way to avoid this many regulations is to be decentralized from top to bottom. Some of these crypto regulations are likely to be very bad. The worse regulations are likely to be something in relation to payment, DeFi, and privacy.

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Also, the crypto industry is likely to grow because of good regulation. This increase in adoption and capital will make it possible for the crypto industry to lobby for bad regulations. Consider that institutions and powerful individuals want privacy. I think Defi will go mainstream in 2023 because of the combination of the better front end, regulatory clarity, increasing liquidity, proof of resiliency from some Defi protocols, and a decline in a centralized entity in the crypto industry. You should not forget that crypto regulation could slow down the adoption of Defi. So far it looks like Defi has been left out of most crypto regulation as long as the protocols are truly decentralized.

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Most of the largest Defi protocols on Ethereum are decentralized and most of them have also been tested institutions in a permission environment namely AVE. This is very interesting because Defi is technically a direct competitor to the traditional financial system as it makes it possible to trade, borrow, lend save. The institutional adoption of Defi is inevitable because many institutions have acknowledged the advent of new technologies such as blockchain, which means there will be a raise to the bottom in terms of transaction fees.