A report on Decentralised Finance (DeFi) was published on 29 October 2021. DeFi is a new developing area of the financial market. It comprises services based on Distributed Ledger Technology (DLT) and smart contracts without the involvement of agents. A rapid growth can be seen in this area, measured by both the value of capital employed and the comprehensiveness of new solutions.
The report describes the basic principles and characteristics of DeFi. Section 4 describes DeFi service categories: stablecoins, credit, exchanges, derivatives, asset management, insurance. References are also made to the status of DeFi in Poland and in selected jurisdictions, and to DeFi in the context of financial crime and compliance.
Interestingly, the report also mentions possible applications of DeFi in the financial market.
The conclusion of the report points to the fact that the DeFi sector is a complex ecosystem, which is not fully transparent. The financial services available in this environment involve risk. As there are no regulations on, for example, investor protection or countering money laundering, there are serious challenges, especially for regulators. The report mentions that even if such regulations existed, there might be no entity that could be held liable. Fully decentralised provision of DeFi services does not allow for the identification of such entities, or at least the contact point for clients.
Full report is available here: https://fintechpoland.com/wp-content/uploads/2020/02/Raport-DeFi-FinTech.pdf