DeFi Shouldn't Be Regulated, Crypto Advocates Tell UK Regulator

Crypto advocates told the Financial Conduct Authority (FCA), the U.K.'s financial watchdog, that decentralized finance (DeFi) shouldn't be regulated because it is too difficult to do so.

In May, the FCA hosted its first two-day CryptoSprint, where 184 industry participants from the U.K. and other countries gathered to hear the FCA's thoughts on how the industry should be regulated. Suggestions made by industry representatives – which included company executives, compliance officers and lawyers – were published on the FCA's website on Wednesday.

According to the report, some participants thought that DeFi, which describes a range of blockchain-powered financial applications designed to cut out intermediaries and centralized institutions such as banks, shouldn't be regulated because of the philosophy behind its creation.

Regulators, however, have been watching DeFi lending platforms like Celsius Network closely after it seemingly folded under pressure from the recent crypto markets downturn.

Other ideas that were raised at the CryptoSprint included using the public ledgers that underlie some cryptocurrency networks to regulate crypto markets and setting up international definitions for crypto assets.

Officials from the FCA who attended the forum included Nikhil Rathi, CEO of the regulator, David Raw, co-director of consumer and retail policy, and Jessica Rusu, chief data, information and intelligence officer.

The FCA hosted CryptoSprint as a way to engage the industry. It hasn't made any promises to create or modify regulations based on what was suggested, but for many in the U.K. crypto industry, the initiative signaled the FCA was finally starting to listen.

Read more: The Crypto Community Says the UK's FCA Is Finally Starting to Listen