BoE policy talk: DeFi had better implement good governance before it’s too late

cointelegraph.com:

The lack of regulation and good governance in the crypto sector is more than a hindrance to businesses and lack of protection for users, it is an existential threat, Bank of England Financial Policy Committee external member Carolyn Wilkins said in a talk on Oct. 19. Decentralized finance (DeFi) would be a good place to start getting affairs in order, she said. 

Speaking at the University College London Centre for Blockchain Technologies, Wilkins said that the most common complaints about scamming that reach the Financial Conduct Authority, the U.K. financial regulator, are about crypto. In addition to that financial risk, investors are also concerned about reputational risk, which, according to Wilkins, is present in DeFi in abundance.

Today, UCL CBT hosted the talk given by Carolyn Wilkins @wilkinscarolyna on '#governance of “#decentralized” Finance: Get up, Stand up!'.For more information, visit https://t.co/G5ie2who1y pic.twitter.com/b9colxbUdx

Wilkins saw the concentration of power in “whales” in DeFi as a source of risk. In the top ten Proof-of-Stake platforms by market capitalization, the top 50 validators hold between 47% and 100% of stakes, she observed. At the same time, there is a lack of transparency about accountability. This tension is seen in the Ooki case in the United States. Wilkins said:

It is not always clear when that centralized decision making is needed or who will carry it out, however. Crypto needs to shape up quickly, as regulated traditional finance is adopting blockchain technology as well, and may go after some of the crypto sector’s market share. Wilkins said:

Wilkins pointed to JPMorgan’s Onyx blockchain trading network and the HQLAX collateral management platform as examples of the unfolding