According to European Parliament VP Eva Kaili, most decentralized finance (DeFi) protocols are not true as decentralized. As a result, she stated, the world requires appropriate legislation to comprehend the inner workings of this developing technology.
Kaili has been a vocal proponent of Bitcoin (BTC) and blockchain technology, having served in the European Parliament since 2014.
European Parliament VP Eva Kaili’s perspective on DeFi
Kaili defined DeFi in an exclusive interview with Cointelegraph during Davos, Switzerland’s World Economic Forum Annual Meeting. DeFi is “completely decentralized” by definition, she explained, which means “nobody can control or […] manipulate a blockchain.”
Kaili did acknowledge that attaining decentralization is a difficult task, noting that “we need safeguards” to recognize the out-of-the-box difficulties. However, these difficulties, she believes, are critical to sensible regulation.
Concerns about DeFi
Concerns about DeFi’s governance systems are not new. There are many fervent Bitcoin advocates claiming that the industry lacks a viable monetary alternative to BTC. However, according to former Blockstream CEO Samson Mow, organizations that can change their protocol at any time administer most DeFi projects.
Kaili previously stated in an interview that blockchain technology provides us with the means to reinforce and improve existing systems through trust and stability.
Despite Kaili’s reservations regarding whether DeFi protocols are genuine as decentralized, European regulators appear to have better knowledge of the market.
According to an April report, the European Commission classified DeFi as a “newly emerging form of autonomous financial intermediation” that exists outside of the traditional finance industry. Although, the report also acknowledged that Europe’s regulatory response to the issue needs to be under reconsideration.
The World Economic Forum Annual Meeting 2022 began Sunday, May 22, and ends on Thursday, May 26.