DeFi remains a niche phenomenon in the context of cryptoasset markets more broadly, as well as the wider financial services sector. However, it is worth noting that the market has grown significantly since its birth. Moreover, while direct exposure of traditional financial institutions to DeFi remains limited, the concept of “Institutional DeFi” has also been introduced in recent years, whereby DeFi structures and technologies may be applied in institutional use cases in a way that is compliant with existing regulatory requirements.
The rapidly evolving and novel nature of the decentralized finance (DeFi) sector presents complex and unique challenges for policy makers and regulators.
The regulatory landscape for the decentralized ecosystem is unclear, and we have worked closely with those in the DeFi space to navigate how existing regulations do—or do not—apply to their activities. We advise clients on an ongoing basis on regulatory, policy, and standards recommendations for DeFi and smart contract implementation, as well as solutions for risk management.
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