Uniswap’s delisting of some tokens causes huge controversy or means “DeFi regulation” has begun

On July 23, the well-known Defi platform Uniswap issued an announcement stating that some tokens would be restricted. This move caused huge controversy on Twitter. Some users accused Uniswap of no longer being a decentralized platform. In this regard, the founder of Uniswap Hayden Adams tweeted and explained that the Uniswap protocol is a fully decentralized smart contract based on Ethereum, and app.uniswap.org is a website owned by Uniswap Labs. The uniswap protocol has always been decentralized. However, as a company, Uniswap Labs cannot allow users to do anything on the websites it owns.

In fact, we have seen that due to the intensified KYC and supervision of centralized exchanges, most of the money laundering activities after hacking are carried out on decentralized exchanges. Uniswap’s move may mean the beginning of regulation in the Defi field.

The Defi field was indeed a regulatory “blind spot” before

Cryptocurrency is already a new thing, and Defi is a new thing in this field. It wasn’t until a year ago that it began to really become popular, and for such a new thing, it is obvious that the attention of supervision can not be concentrated at once. .

The early cryptocurrency field also lacked supervision. Take the shapeshift website, which was founded in Colorado, USA in 2014, as an example. This is a centralized cryptocurrency self-service trading website. Users can trade cryptocurrencies through it without registration. In the first few years of its establishment, it has been anonymously used. Until 2018, after experiencing the bull market in cryptocurrency, shapeshift was noticed by the regulatory authorities and had to start requiring users to conduct KYC. At the beginning of this year, it began to transform into a Defi platform, and therefore no longer requires users to conduct KYC. It can be seen that Defi is still in the blind spot of supervision.

In the eyes of regulators, “decentralization” is not an excuse

A venture capitalist with multiple investments in the cryptocurrency field. Fred Wilson from Union Square Ventures published a blog stating that blockchain, smart contracts, and decentralized platforms are just software. Even if they are separated from the company, they are not running. Therefore, supervising them is equivalent to supervising software.

As a venture capitalist, Fred Wilson has huge interests in the cryptocurrency field, so his statement can only represent a family. Regulators have begun to pay attention to Defi. In a speech on May 26 this year, SEC Chairman Gary Gensler already mentioned Defi. He said, “The cryptocurrency lending platform and the so-called Defi platform protect investors from the SEC. Brings certain challenges.” In addition, since most Defi platforms issue governance tokens, referring to past experience and according to SEC standards, these tokens are also unregistered securities. US Commodity Futures Trading Commission member Dan M. Berkowitz’s words are even sharper: I not only think that unlicensed DeFi derivatives markets are a’bad idea’, I even think they are illegal under the (Commodity Exchange Act) of.

In China, Li Lihui, the former President of the Bank of China, pointed out in the latest speech that in the application of decentralized financial protocols, open networks have no access restrictions, transparent capital flows are easy for transaction parties to track, and non-centrally controlled transactions are rejected by regulators. And review. Therefore, it can be said that decentralized financial transactions can be anonymous, cross-border, and difficult to control. It may become a tool for illegal capital flow and speculative transactions.

In the user terms of the Derivatives Defi platform dydx, the first sentence reads “Our perpetual contract does not provide services to any American residents”, which is also contrary to Defi’s decentralized spirit. Similar to Uniswap, most Defi platforms have operating entities, and these operating entities must comply with regulatory rules.

Where will Defi regulation go in the future

When it comes to supervision, one has to mention an organization, FATF, the full name is Financial Action Task Force, which is an anti-money laundering financial action task force. This is an international organization that can be regarded as the International Criminal Police in the field of anti-money laundering. Guiding policies for anti-money laundering, and coordinate the relevant departments of various countries to combat money laundering.

For the anti-money laundering work in the cryptocurrency field, the FATF began to draft a detailed working draft several years ago. However, due to the rapid development of this field, this draft has been updated. In the 2019 version, Defi has not yet been made. Clearly stated, but in the version released this year, the content about Defi has been updated. The draft states:

Judging whether an organization is a virtual asset service provider (VASP) needs to be considered from the full life cycle of its product. If a service provides virtual asset services, even if the service can operate independently from the organization in the future, the organization still belongs to Virtual asset service providers need to accept supervision.

This means that even if an organization only creates the code for smart contracts, it should be regulated as a virtual asset service provider. Specifically for Defi, it is necessary to perform KYC for each user participating in Defi transactions.

It is conceivable that the FATF’s working draft is very controversial and is still being solicited for comments. The final version will be released in October this year. Even if the draft is officially released, it will be very difficult to implement from a technical perspective, and it is difficult to coordinate the pace of countries. Therefore, although the regulation of Defi is tightening, it will take many years to implement it. (The head picture comes from cryptoslate)

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/uniswaps-delisting-of-some-tokens-causes-huge-controversy-or-means-defi-regulation-has-begun/
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