A California lawyer has said that there may not be regulatory consequences on DeFi despite the huge funds locked away. The Decentralized Finance sector boasts of nothing less than a total volume of $6 billion according to reports from DeFi Pulse.
But despite the enormous amount of money locked away in the sector, a particular lawyer has given reasons why investors might escape regulatory consequences on DeFi as a result of the structure of the sector.
MD of a legal firm in California, Collins Belton, notes that legitimate DeFi projects will give law enforcement a tough time compared to Initial Coin Offering. Furthermore, he also said ICOs centralization and its security token issuance is not something that can be found in the DeFi sector.
Regulators leverage up by prosecuting some specific firms
According to Belton, regulators always note two things before looking critically at any business investment or operation. The first is if an organization can be held liable for a crime with the second being avoiding legal fees that may arise from violation.
In Belton’s words, they are very selective when taking actions against firms and would easily make an example out of a firm so that firms that spring up in the future can learn from them.
This move allows the regulatory authority to leverage up, Belton says. But in this case, Belton says regulatory consequences on DeFi might lack the much-needed reason to prosecute the sector.
Belton gives reasons why regulatory consequences on DeFi may not happen
Belton further says that since no one knows which market is good and which is in the DeFi sector, regulators would not know which to probe.
Citing an example, he mentioned the buzzing project, Yearn Finance which is governed by some few token holders and has no real person responsible for prosecution in case of a sanction. This means that Yearn Finance(YFI) is immune to charges in case it folds up in the nearest future, which would mean millions of cash gone.
Belton says the community do not care what happens to the developer of the project, but they are content as long as the project carries on this way. If the above is taken into consideration, then regulatory consequences on DeFi may not happen.