Regulations in a world without borders; How is the legislation on defam regulated?



You are unlikely to be interested in the world of digital currencies and unfamiliar with the concept of decentralized finance or DeFi. Defy is one of the most important achievements of the decentralized world and its importance in today’s world is undeniable. Today we do not live in a world where there are doubts about the success of digital currencies and their achievements, but the only question we need to ask ourselves is how to deal with this wave of decentralization and how to make the most of it?

Governments and governments around the world have realized this, and so instead of banning defense, they are thinking of legitimizing it; But the problem is that regulating decentralized finance is not an easy task. Confidentiality, security of transactions, elimination of intermediaries and the removal of power by governments are the main goals of the emergence of digital currencies. How can these currencies be regulated while maintaining all these characteristics?

In this article, compiled with the help of an article from the Kevin Telegraph website, we look at defense legislation from the perspective of one of the authors of this website, Jane Thomason. Jane Thomason is one of the leading researchers in the social impact of Chinese blockchain technology and has written numerous books and articles on the subject. You can read the rest of the article by this author.

The need for legislation

Regulations in a world without borders;  How is the legislation on defam regulated?

My dear friends, fasten your hat; Because you have entered a new world. You have a direct financial system, which everyone has access to around the clock only with a mobile phone and wallet. As Julien Buteloop, CEO of Stake Capital, told me:

What we are building at Defy is a completely decentralized and transparent technology that is driven by formulas and mathematical functions and no one can beat it. With 40 years of research, basic research and discrete mathematics, we are building something that works internally and that no one can break. You can’t hurt him. GitHub did not exist in the 1990s. The fact that I move at the speed of light is due to the fact that everything is open source and anyone can participate in it.

A report from Novum Insights in August shows that Diffie’s market has grown 40 times since 2020. At that time, the total value of locks (TVL) in this area was $ 61 billion, while that number is now estimated at $ 165 million. The market value of stable coins, which are an important part of Difai, also rose to $ 112 billion in the first half of 2021.

This area has brought huge benefits to some; But at the same time, some Diffay investors have lost much of their capital; Because defense is neither legal nor controlled and there are no intermediaries in it.

This domain is not hosted or approved by a central authority and is governed solely by smart contracts. So if a smart contract fails or is attacked, consumers have no choice. Loretta Joseph, global regulator of digital assets, told me:

Legislators protect consumers and investors. You do not have a mediator in your defense; So this innovation is completely unique. The question arises, how will this area be regulated in the future? Why so [در آینده‌ای نزدیک] We will face fraud in this area, and when people fall victim to fraud, the first thing they do is file a complaint with the legal authorities.

In fact, since 2019, hacks and other malicious attacks have resulted in the loss of approximately $ 285 million in defy protocols. According to experts, most of these hacks are caused by incompetence of developers and coding errors. As this area relies entirely on code, this issue is of great importance and is in itself a serious challenge.

Overcome legislative challenges

Regulations in a world without borders;  How is the legislation on defam regulated?

Hester Peirce, a member of the US Securities and Exchange Commission, told Forkast.News in February about defense:

This area will be a challenge for us; Because most of the time we legislate through intermediaries. However, when you make a truly decentralized product, there is no middle ground. This feature is great for system success; But this makes it difficult for many of us who want to enter this area and legitimize it.

The sharp fluctuations in digital currency markets, the risk of money laundering and terrorist financing, the unregulated nature of this market and the lack of a legal authority to rely on it at a time of financial loss are among the concerns of digital currency regulators.

On the other hand, the explosive tokens that explode have created a wave of excitement, confusion, legal issues and, of course, huge profits. Heterogeneous token markets attract large transactions in the digital currency market and this is likely to be a problem for legislators; This is because they may be suspicious of the transfer of large sums of money and perceive it as a sign of money laundering.

At the macro level, the decentralization of the financial system, the ability to manage economic stability and protect the interests of consumers will pose even greater challenges for legislators.

Decentralized self-governing organizations (DAOs) are popular as a means of transferring digital currencies across various blockchains. These organizations support lending in digital currencies and cultivating profits. According to conservative estimates, Taoists control more than $ 543 million in assets.

Taoists are controlled and governed by intelligent contracts, and intelligent contracts are monitored and executed by algorithms. This means that in this process, the codes (or algorithms) simultaneously manage and enforce the law. Now the question is, if the algorithms fail, who is responsible?

In a joint paper entitled “China’s Bloc Legislation, Distributed General Administration and Smart Contracts: A Legislative Legislator’s Perspective”, a group of researchers addressed some of the key points. They think:

  • It is important to identify focal points that can be used to implement regulations. These focal points can be miners, mass software developers and end users. They even increase the potential of government and legal entities for potential participation.
  • Issues related to the identification and allocation of responsibilities must be given priority. Can core software developers be held accountable?
  • The challenges of consistency and the inability to update smart contracts are also issues that need to be addressed.
  • The need to study technology-related processes and ensure their quality is strongly felt.

Providers of exchanges and portfolios are expected to be the focus of lawmakers. Decentralized exchanges allow consumers to buy and sell directly through their portfolios and on a peer-to-peer basis.

The Financial Action Task Force (FATF), the global money laundering supervisor, monitors the work of exchange offices. Christopher Harding, chief executive of civil law enforcement, said:

The FATF has proposed guidelines that require decentralized programs (DApps) to comply with each country’s specific rules in order to comply with FATF requirements, anti-money laundering and anti-terrorist financing laws.

A review of the performance of 16 major exchange offices by the London School of Economics and Political Science shows that only four exchange offices are required to comply with significant levels of transaction rules. As a result, there is a clear gap in this area.

Currently, any project that wants to be listed on a major exchange must go through audit processes; But the history of security does not end there. Toby Lewis, CEO of Novom Insights, said:

Keep in mind that smart contracts, even audited ones, can be attacked. There is no guarantee that they will be free of errors or security holes. So before you enter this field, research yourself.

In an open source environment, where projects are evolving at a complex annual growth rate of around 20%, finding the right time to legislate so as to protect people from risk and not limit creativity is a long-standing problem. It seems difficult to decide.

Some countries, such as the United Kingdom, Bermuda, India, South Korea, Mauritius, Australia, Papua New Guinea and Singapore, have used pilot laws to achieve this balance, while others, such as San Marino, Malta and Liechtenstein, have applied directly. in this area. Put yourself.

Prominent figures in the field of defense have no resistance to the legislation and have accepted it as part of the maturity and evolution of the industry. In an interview with the Quinn Telegraph website, Stani Kulechov, founder of the Aave Lending Platform, which works in the field of defense, Group review and debugging of projects by users themselves He considered the final future of this area and said in this regard:

It is not the job of the inspectors to ensure the security of the protocol. They only help to identify problems that the team members themselves were not aware of. Ultimately, these protocols need to be reviewed and removed by the users themselves, and we, as a community, need to find incentives that allow more and more security experts to enter the space.

Emeliano Bonassi, one of the leading Italian figures in the field of defense, in the same article we mentioned earlier, mentioned a review forum called ReviewsDAO, which directs security experts to projects that need to be reviewed. Bonassi sees such an association as an opportunity to learn; An opportunity that people with specialized knowledge can take advantage of to contribute to improving the security of the ecosystem.

Tang Tran, CEO of Vemanti Group, also believes:

In the future, we will see the adoption of more and more platforms with unlicensed financial products and services that can be used by anyone and anywhere; However, each of these products and services is subject to a centralized regulatory body to ensure that they are accountable and comply with the law. These processes are not intended to limit innovation, but rather to prevent the abuse of fraud by ordinary consumers.

Brendan Bloomer, CEO of Block.one, summed up his interview with Quinn Telegraph:

The real winners in the digital economy will be those who think long-term and design their products to meet legal requirements and professional services.

It seems that money changers and software developers will definitely come to the attention of legislators. We expect legislators to look for ways to improve quality assurance and technology management processes; Methods designed exclusively for this industry.

Mark Taylor, head of financial crime at CEX.IO, also stressed that lawmakers must continue to work with members of the digital currency industry to protect consumers and consumers. Julien Bootlop explains:

In the field of defense, we offer virtually all products and services that exist in traditional finance, but in a faster, stronger, clearer and more accessible way. This is really different. This [امور مالی غیرمتمرکز] This means that everyone in the world has access to technology and does not need permission from anyone. I believe that this is essential to foster innovation and build a better world.

Indeed, in Defy’s daily global market without borders, do we need to legitimize what or who and how to do it? This is a brand new playground; A complex and lesser-known area in which legislators and industry players need to work hand in hand to pass the right legislation.

Postal rules in a world without borders; How is the legislation on defam regulated? appeared first for currency.

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