The charge of businesses and innovators looking to make the next big step in the DeFi story continues despite the naysaying of big banking names. Unfortunately, regulators look set to back up the banks and private finance magnates, with CNBC noting that the Fed sees DeFi as the ‘wild west’ of crypto – and the next viable target for crackdowns. Of course, there is some wisdom in the government’s view – there are a lot of malicious actors trying to make a quick buck out of DeFi, and a lot of failed projects. That, however, should not take away from the wider goal – and the signs are that DeFi as an idea and as a reality will persist.

Official connections

One route towards legitimacy will come to DeFi through the involvement of big companies. The financial establishment in the US holds a lot of sway, both in providing opportunities to new business and in terms of lobbying for rule changes that could work against the goals of DeFi. This is as much due to technological lag as it is a fear of how the market may change. In addition, DeFi is based on sophisticated technical tools that many institutions simply do not have access to.

According to a recent profile in Fortune magazine, RadioShack might be that connector. RadioShack is an enthusiast’s outlet, and popular among older markets. It’s also a stocks and shares market stalwart, a solid stock favored by the large institutions and carrying a serious amount of clout. Sometimes described as ‘the original tech company’, it has founded it’s own DeFi and is being viewed with some interest by the major institutions. This can help to lend legitimacy, which in turn can help to promote the tech behind DeFi.

The metaverse

With the growth of the metaverse, and digital currencies used within it, there is an opportunity for the wide scale adoption of DeFi in and outside of virtual reality. Analysis by ZDNet concludes that the cross-cutting nature of the metaverse and its big tech player owners will create the opportunity for everyday people to use DeFi. This is an invaluable chance to raise the legitimacy of DeFi and its foundational tech for future generations, and create a use case scenario where regulation cannot ignore it. Essentially, making DeFi incredibly popular will push it forward as a necessary part of the market – even the government cannot turn down the overwhelming benefits that wide-scale adoption will offer.

Alternative impetus

There is also an alternative way for DeFi to make a big impact in the world economy. According to TechCrunch, DeFi startup Goldfinch recently raised $25 million for their DeFi lending scheme. The focus of this enterprise is in developing countries, such as those found in sub-Saharan Africa, where access to traditional finance and credit lines is often quite restricted.

The decentralized protocol enables lenders to surpass the means of banks and institutional lenders in areas where they have previously had a tight grip. This enables real-world development and business growth which will serve, as much as anything else, as a reminder to regulators as to the potential of cryptos and DeFi. While the US market may be slow on the uptake, with regulators pushing back against the tide, other areas of the world are behaving more creatively.

This offers hope for DeFi in a regulatory environment that just keeps pushing away. Regulators and some of the larger financial institutions are wary of DeFi and the impact it can make. A public demonstration of its benefits, whether that be overseas or in the metaverse, could be the best antidote.

Source: Plato Data Intelligence: PlatoData.io