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A report by Binance and the National Bank of Kazakhstan shows that the best way to regulate the interior space of DeFi is to adopt a wait-and-see attitude.

According to their joint report entitled "The Status of Digital Money Market and DeFi in Central Asian Countries", while waiting for the development of the sales market, the two people proposed to enhance cooperation between regulatory organizations, carry out construction and learning training according to the regulatory sandbox game, and guide and educate users and legislators

proposal

Binance and Kazakhstan agreed that the best way to regulate the interior space of DeFi is to make its own development trend. At the same time, they spent time analyzing the interior space and experimenting with policies and regulations.

The first recommendation of the report is to promote cooperation between regulators and participants in traditional finance and DeFi. This will enable the centralized and fragmented financial industry to find a way to coexist. Therefore, the report uses a unified view and emphasizes:

"Decentralized exchanges will be higher than centralized trading centers. However, in the near future, centralized and blockchain technology encryption protocols can coexist, because many people will still focus on traditional account browsing."

In the spirit of coexistence, the report proposes to establish a standardized and user-friendly infrastructure as the second step to connect the two industries. The infrastructure construction will take measures to promote the transaction from cryptocurrency to circulating currency and increase the distance between CeFi and DeFi.

Another proposal encourages the establishment of a regulatory sandbox game to test and learn while running joint research and development projects to scientifically study the DeFi area. Obtaining theoretical knowledge in these fields will lead to clear laws of DeFi-related activities and further development trend.

Finally, the report mentioned the need to improve the financial and digital literacy of customers, while reducing the differences in encryption expertise of legislators.

Look at these

In order to broaden our perspective on how to try to regulate the encryption industry, the report discusses in detail various regulatory structures around the world and divides them into three key ways:

According to the report, "implementing policies and regulations that do not meet the purpose" will wipe out the independent innovation of the DeFi ecosystem. The construction of the new architecture was suspended again because "it seems too early at this stage, because the public government and its ecosystem need more time to understand all the test cases related to DeFi"

Therefore, the report concludes that the third option is the only one that legislators can make today.

Regulatory test

DeFi allows users to make financial investment without any intermediary and borrow from the same industry at the same time. Because it is not attached to the official network physical line, it is difficult to regulate Defi indoor space. According to the report, the characteristics of DeFi have brought some tests to regulatory organizations.

First of all, customers lack financial and digital literacy, regulatory organizations lack encryption expertise, the negative effects of investors, the reasonableness and legality of the data provided by the forecaster, the lack of government procurement processes and the stability risks of the financial industry, such as the liquidity liquidity of banking business caused by economic policies, which are all new development trends that test the regulatory organizations.

Secondly, participants, stakeholders and the whole industry are exposed to accounting, technical and operational risks, which adds various tests to the regulatory organization. We must deal with the risks of sales market control, technical failure, bifurcation, rectification of security vulnerabilities, fraud, fish loan attack and hacker attack.

Binance and Kazakhstan

Binance and Kazakhstan will gradually establish a strategic partnership in 2022. In May 2022, Binance CEO Zhao Changpeng (CZ) visited the host country in person and met with the President of the United States and most famous legislators of the host country.

At that time, CZ recognized Kazakhstan as "one of the world's managers in the field of encryption". CZ also stressed that Binance will work with the law enforcement authorities in the country to contribute to the development trend of encryption in the region.

In October 2022, Kazakhstan first tested its central bank digital currency (CBDC) digital tenge on the BNB chain.

Action must be taken to regulate the encrypted property of