- DeFi has grown rapidly, but faces regulatory scrutiny over compliance issues. Integrating with mainstream finance requires addressing these concerns.
- Monica Long believes pioneering compliance solutions for DeFi will be a major breakthrough in 2023. Regulations are expanding and DeFi projects need to prioritize compliance.
- Properly regulated DeFi can unlock real utility and revenue growth at scale. Long sees compliance as an area ripe for innovation to bridge DeFi with mainstream finance.
Decentralized finance (DeFi) has exploded in popularity over the past few years. However, the sector has also faced increased scrutiny from regulators due to compliance concerns. In a recent interview, Ripple president Monica Long predicted that pioneering compliance solutions for DeFi will be the biggest breakthrough in 2024.
The Need for Compliance
Long argues that real-world utility and mass adoption requires integration with existing financial systems. This means addressing regulatory concerns through compliance tools and frameworks specifically designed for decentralized protocols.
She believes the previous speculative hype cycles around ICOs and NFTs will shift to an era where DeFi projects take compliance seriously from the start. Regulators worldwide are already expanding oversight of crypto, with new SEC rules targeting DeFi activities.
Compliance Fuels Innovation
According to Long, applying existing regulations to DeFi use cases like DEX trading still poses challenges. She sees compliance as an area ripe for innovation in 2023. Properly regulated DeFi can unlock real utility at scale.
Revenue Growth Requires Compliance
Research shows the average DeFi revenue per user could reach $1,378 by 2024. Most of this will come from DEX trading fees. However, to access a wider user base and sustain revenue growth, DeFi projects need to prioritize compliance.
The Path Forward
For Long, the ideal path is integrating compliant DeFi solutions with mainstream finance. Ripple aims to bridge these worlds through its blockchain network and crypto infrastructure. She argues understanding the foundations of the existing system is key to transforming finance.