Decentralized finance (defi) brings risks for investors but is yet to pose “meaningful risks” to financial stability, according to Europe’s securities watchdog. The agency believes, however, the phenomenon deserves attention in light of the EU’s new crypto rules as well as growing user base and has presented its assessment of the sector’s development.
Defi Requires Monitoring as It Continues to Evolve Quickly, ESMA Says
The European Securities and Markets Authority (ESMA), the European Union’s financial markets and securities regulator, has published an article focused on decentralized finance which it recognizes as the most innovative development in the crypto space.
While investors’ exposure to defi remains limited, it comes with “serious risks” to investor protection, the report notes, emphasizing on the speculative nature of defi offerings, the absence of responsible parties as well as associated operational and security vulnerabilities. At the same time, ESMA rem
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