Lyle Hauser of The Vantage Group discusses DeFi regulations and its impact. Check out his insights on how the regulatory space may evolve when it comes to cryptocurrency like Bitcoin and what the lasting impacts could entail. Follow Lyle Hauser of The Vantage Group on lylehauser.com and his IG account @LyleHauser_TheVantageGroup. You can also check out his insights on bitcoin on @LyleHauser on Twitter.

1. REGULATORS TAKING
A LONG LOOK AT
DEFI
Lyle Hauser
The Vantage Group
2022
01

2. Crypto
In the wake of some troubling cyberattacks and scams
inflicted upon the decentralized finance sector in 2021,
questions were raised about the necessity of DeFi
regulation, questions that were addressed in part when
the Global Blockchain Business Council rolled out the first
edition of the International Journal of Blockchain Law in
November of that year.
In the foreword, Dr. Matthias Artzt, Deutsche Bank’s senior
legal counsel, wrote that blockchain technology “will have
a significant impact on the field of law,” while adding that
it is too early to tell how great that impact will be:
Will current law bend to new use cases inspired and
enabled by blockchain technology or will we see new
laws enacted, especially in such areas as contract,
intellectual property, regulatory, and antitrust law?
U.S. Securities and Exchange Commission commissioner
Caroline Crenshaw amplified the point later in the report,
noting that while DeFi “presents a panoply of
opportunities,” it also “poses important risks and
challenges for regulators, investors, and the financial
markets.” She added that DeFi’s current “buyer beware”
approach was simply not adequate, and that besides
the SEC, the Department of Justice, Internal Revenue
Service, Commodities Future Trading Commission and
Financial Criminal Enforcement Network have jurisdiction
over “aspects of DeFi.”
2022

3. L Y L E H A U S E R O F T H E V A N T A G E G R O U P
It is not the first attempt on the part of a regulatory body to get
a read on DeFi, much less a handle – an understandable trend,
given that as of early 2022 there was nearly $237 billion of value
locked in DeFi projects, up from $13 billion at the end of 2020.
On Oct. 28, 2021 the Financial Action Task Force (FATF), an
international organization, issued some guidance for dealing
with DeFi, centering not only on the licensing and registration of
Virtual Asset Service Providers (VASPs) but also on such
matters as money-laundering and terrorist financing through
peer-to-peer transactions.
But the guidance raises a simple question: Who can be held
accountable when the things go awry with a DeFi exchange? It
is a monetary system (not to mention an investment vehicle)
that operates without a centralized authority; that’s the whole
point of DeFi to begin with.
Agustin Carstens, general manager of the Bank for International
Settlements, told CNBC in December 2021 that “the decentralized
aspect tends to be illusive” and added:
“There are some incentive issues related to the fact that, through
this decentralization, at some point you end up with some
agents that play an important role, and not necessarily for the
best (interests) of users of financial services.”
2022

4. L Y L E H A U S E R O F T H E V A N T A G E G R O U P
Crypto & DeFi
Unraveling that mystery will be one of the great
challenges for any regulatory body that is seeking to
solve DeFi issues. So too is the fact that DeFi platforms
are not bound by any geographical boundaries, though
there are those who believe guidance can be found in
the Foreign Account Tax Compliance Act of 2010, which
enables U.S. authorities to regulate American citizens’
use of foreign currency around the globe, and the
European Union’s General Data Protection regulation,
which was passed in 2018 and governs data usage on
the part of Europeans when in a foreign land.
The bottom line is that governmental officials are well
aware of the risks and challenges of DeFi. While it is not
entirely clear what might happen next, it seems certain
that various bodies will continue to monitor the
situation, and that movement on this front is entirely
possible.

5. P R E S E N T A T I O N 15
Contact
Lyle Hauser
Chairman & CEO of
The Vantage Group
2022
lylehauser.com or vantagegroup.net
LinkedIn: Lyle Hauser
Twitter: @lylehauser
IG: @LyleHauser_TheVantageGroup