The ESMA doesn’t believe that DeFi managed to avoid the counterparty risk, even if, in theory, it should be lower or even non-existent.
The European Securities and Markets Authority , the European Union’s markets regulator,In a 22-page report, the ESMA admits the promised benefits of DeFi, such as greater financial inclusion, the development of innovative financial products, and the enhancement of financial transactions’ speed, security, and costs.
However, the paper also highlights the “significant risks” of DeFi. According to ESMA, the first one is the liquidity risk tied to the highly speculative and volatile nature of many crypto-assets. The regulator compares the 30-day volatility of Bitcoin or Ether and the Euro Stoxx 50, with the former being on average 3.6 and 4.7 times higher than the latter.
The ESMA doesn’t believe that DeFi managed to avoid the counterparty risk, even if, in theory, it should be lower or even non-existent due to smart contracts and atomicity. Yet, smart contracts are not immune to errors or flaws.DeFi is especially vulnerable to scams and illicit activities as it lacks know-your-customer protocols. Another important source of risk for DeFi users, as specified in the report, is the lack of an identifiable responsible party and the absence of a recourse mechanism.
But, at this point, DeFi, and crypto in general, do not represent “meaningful risks” to financial stability, the report concludes. That is because of their relatively small size and limited interconnectedness between crypto and traditional financial markets.on Oct. 5.
México Últimas Noticias, México Titulares
Similar News:También puedes leer noticias similares a ésta que hemos recopilado de otras fuentes de noticias.
Béla Tarr to Receive Honorary Award From European Film AcademyHungarian director Béla Tarr will receive the Honorary Award from of the Academy President and Board at the European Film Awards on Dec. 9.
Leer más »
Insurance Costs Could Cripple European Electric Car SalesAs a former European Automotive correspondent for Reuters, I’ve a spent a few years writing about the industry. I will penetrate the corporate hype and bluster and find out how these gigantic enterprises are really doing. I also love to drive their magnificent machines, and their more modest ones. I’ll be telling you if the technology works, too.
Leer más »
A New Wave of European Farmhouse Hotels Is Drawing City-Dwelling Gourmands to the CountrysideFrom Villa Lena to Auberge Sauvage, Tom Howells explores the best countryside hotels for foodies around the world.
Leer más »
Close your equity hedge and go overweight European stocks, says Deutsche BankJamie Chisholm is a markets reporter based in London.
Leer más »
The Harmonization Of European Digital Healthcare Is A Massive Opportunity For Businesses And PatientsFounder and CTO at Kranus Health — a leader in virtual care in Urology based in Munich, Germany. Read Nikolay Dimolarov's full executive profile here.
Leer más »
Cryptocurrencies Price Prediction: Crypto, Altcoins & Solana – European Wrap 10 OctoberBitcoin (BTC) price shows weakness as it approaches a key hurdle. Rejection for BTC could prompt altcoins like Ethereum (ETH) and Ripple (XRP) to cras
Leer más »