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Shibtoshi, the founder of the SilentSwap privacy-preserving trading platform, outlined several concerns that make institutions hesitant to adopt decentralized finance (DeFi) solutions, including privacy, a lack of standardized compliance regulations, and legal accountability.<\/p>\n
The DeFi founder told Cointelegraph that the high transparency of onchain transactions<\/a> presents a problem for companies that must conceal sensitive information<\/a>, including trading strategies, payroll information, and business-to-business agreements. Shibtoshi said:<\/p>\n “The main concerns \u2014 regulatory uncertainty, privacy limitations, and complex user experience \u2014 are real, but solvable. Innovations in privacy-preserving protocols are making DeFi increasingly compatible with enterprise needs. Platforms like SilentSwap are a step in that direction.”<\/p><\/blockquote>\n Regulatory uncertainty continues to be one of the biggest problems for DeFi and is compounded by a fragmented approach across legal jurisdictions, which prevents institutional adoption, Shibtoshi added.<\/p>\n “Are DeFi tokens securities? What happens if a decentralized autonomous organization (DAO) messes up \u2014 and who is responsible when it does? It is all still pretty unclear,” the SilentSwap founder told Cointelegraph.<\/p>\n Shibtoshi urged common sense regulations that encourage innovation and preserve the value propositions of decentralized finance, including self-custody, speed, and cost-effective transactions.<\/p>\n The total value locked across the DeFi ecosystem has not yet returned to peak levels witnessed in 2021 and 2022. Source: <\/em>DeFiLlama<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n Related: <\/strong><\/em>Specialized purpose DEXs poised for growth in 2025 \u2014 Curve founder<\/strong><\/em><\/a><\/p>\n Both chambers of the United States Congress recently voted to overturn the highly unpopular DeFi broker<\/a> rule requiring decentralized finance protocols and platforms to report customer transactions to the Internal Revenue Service (IRS).<\/p>\n The US Senate repealed the IRS broker rule<\/a> in a 70 to 27 vote on March 4, followed by members of the US House of Representatives voting to repeal the IRS rule<\/a> on March 11.<\/p>\n Despite the repeal of the archaic rule, overregulation may end up killing a sector that was born as a decentralized, more accessible, and pseudonymous alternative to traditional finance.<\/p>\n According to crypto entrepreneur and investor Artem Tolkachev, regulatory compliance is undermining decentralization in DeFi<\/a> and destroying the value proposition of the nascent sector.<\/p>\n The emphasis on regulatory compliance measures increases the potential for censorship and shifts control from the users to third-party intermediaries and large institutions, Tolkachev wrote.<\/p>\nUS Congress overturns archaic DeFi rule, but DeFi still in danger<\/h2>\n