Siam Commercial Bank president, Dr. Arak Sutivong believes DeFi needs a framework on how it can be integrated with the rest of the financial ecosystem.
Dr. Arak Sutivong, the president of Siam Commercial Bank (SCB) and the CEO of SCB 10X, has provided insight into how one of Southeast Asia’s top venture capital funds perceives the future of DeFi when it comes to the thorny issue of regulation.
SCB 10X is the venture capital arm of SCB, Thailand’s oldest bank, and it primarily invests in blockchain-based financial services including DeFi and digital assets.
Dr. Sutivong stated in his opening remarks at SCB 10X’s second annual worldwide DeFi virtual summit, REDeFiNE, that DeFi had now “by many measures” broken through to the mainstream.
In terms of growth, he said the sector had grown tenfold in the last six months, with more than $100 billion in total value locked up in the DeFi ecosystem this year.
According to him, the sector has seen “tremendous development” in terms of users, traded volume on exchanges, and developed DApps.
Despite all of the progress and excitement, Dr. Sutivong stressed that the nascent business still faces a number of challenges, noting that “there are some troubling areas such as fraud that we constantly hearing in the press.”
Stakeholders in the industry and regulators have expressed a great deal of concern.” In his opinion, tackling this throughout the medium and long term presents distinct problems, given that:
“DeFi, by definition, cannot be fully regulated. Instead, there needs to be a framework for how DeFi can be integrated with the rest of the financial ecosystem.”
Dr. Sutivong’s observations on regulatory compliance sustainability and developing approaches come after a succession of proactive and unfriendly interventions by global regulators and organizations.
The World Economic Forum produced a policy guide for DeFi in early June, recommending solutions to reconcile competing needs like decentralization and privacy while preventing illegal activity such as money laundering.
The toolbox specifically addressed concerns that new regulatory actions could impose considerable costs on DeFi startups, preventing smaller players from entering the market.
Many DeFi developers have been concerned about how the Financial Action Task Force’s recommendations for regulating virtual asset service providers (VASPs) may impact them.
Commissioner of the United States Commodity Futures Trading Commission Dan M. Berkovitz stated in early June that he believed DeFi derivatives platforms might violate the country’s Commodity Exchange Act and so be illegal.
