Ripple’s president, Monica Long, predicts that compliance in decentralized finance (DeFi) will be the industry’s major breakthrough in 2024. In an interview with Cointelegraph, Long stated that the previous hype cycles driven by initial coin offerings and nonfungible tokens will be replaced by real-world utility at a large scale, which necessitates compliance, usability, and integration with existing systems.
DeFi represents a transition from traditional, centralized financial systems to peer-to-peer finance facilitated by blockchain technology. The market capitalization of the sector currently stands at $79.5 billion, according to CoinGecko data. The potential compliance implications with existing financial laws have drawn the attention of regulators worldwide.
The United States is taking measures to enhance oversight of cryptocurrencies and DeFi. The Securities and Exchange Commission has implemented new regulations that redefine the terms “dealer” and “government securities dealer,” requiring more market participants to register with the regulator.
Monica Long, the president of Ripple, believes that DeFi regulation is an area that is “ripe for innovation this year.” She argues that compliance is essential for the industry and that applying existing rules to DeFi use cases, such as decentralized exchange trading, remains a challenge.
According to Statista, the average revenue per user in the DeFi market is projected to reach $1,378 in 2024. Most of this revenue will come from decentralized exchanges (DEXs), which allow users to trade cryptocurrencies without a central authority. Uniswap, one of the most popular DEXs, has generated nearly $10 million in fee income for its liquidity providers in the past week.
Long predicts that compliance will drive real utility and widespread adoption of DeFi, which requires integration with existing infrastructure and systems. She emphasizes the importance of understanding the foundations and history of the problem in order to transform how society moves, manages, tokenizes, and stores value.
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