The European Central Bank has a very nasty view of cryptography. Even DeFi holders can be regulated
The European Central Bank has released a new macroprudential review that highlights European concerns about cryptocurrencies. This document touches on topics such as the role of Stablecoin, the environmental risks of proof of work consensus, and the area of decentralized finance.
Cryptographic ecological problems
Currently, European Union state officials are facing the same choices as the situation in the automotive sector, whether to encourage PoS consensus assigned the role of cryptographic version of electric vehicles, or to focus on restrictions. Or ban PoW compared to traditional cars.
This similarity is certainly relevant, as PoW crypto assets have already eliminated emission savings and global net savings in most countries by encouraging the transition of electric vehicles.
Therefore, a “no action” approach by government officials is possible, but unlikely. However, political action by the authorities is a more viable option, whether it is a disclosure requirement, a carbon tax on crypto transactions or ownership, or a complete ban on the mining industry.
The DeFi segment of the cryptocurrency market Special attention from the ECB, Questioned its true decentralization. Taking Uniswap’s holding structure as an example, regulators have found that most of the token offerings are in the hands of a small number of people, and the fact that the DeFi protocol requires human involvement is the fact that all holders, He said it could lead to DAO and DeFi. A regulated project team.
“For example, 80% of the total supply of Uniswap’s governance token UNI distribution is held by teams, early investors, and token holders with a balance of over 1 million UNI. In addition, total token holders. 1% of addresses hold about 97% of total token supply. ” pic.twitter.com/BqOHCVZEMi
— Patrick Hansen (@paddi_hansen) July 12, 2022
Safety and sustainability of Stablecoins
Stablecoin has not been overlooked either. As regulators evolved the DeFi sector, Stablecoin, originally thought of as a parking lot for cryptocurrency liquidity, has become increasingly sophisticated in its usage and format, resulting in stability tips. States to have lost altogether. According to the ECB, the concept of “stability” itself has been turned upside down, and even though there is no collateral, even algorithmic stablecoins are considered safe.
At the end of the manifest review, regulators called for urgent regulation of the Stablecoin segment to avoid repeated Terra and UST cases, and the entire general crypto market.