DeFi Crackdown

As things are going right now, stablecoins be next for the crackdown, and a crackdown could affect the price of ETH because most stablecoins live on the Ethereum blockchain. Stablecoin and ETH have been connected in the Ethereum DeFi protocols and the truth can't be denied because ETH is being used as collateral to borrow stablecoin like USD on the borrowing and lending protocol. Unfortunately, Defi borrow and lending protocol has recently suffered some attacker for hackers. The popular one of these is the hack of Euler Finance which resulted in 200 million dollars of losses but they were lucky that the hacker return the funds for a 1 million dollar bounty. Unfortunately, the hacker of exploited Yearn Finance for about 11 million dollars did not return the money, and moved money to Tornado Cash. The good news is that AVVE wasn't affected by the hackers which a lot of people have been concerned about.

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The hacks how been have been inviting even more regulatory scrutiny into the world of decentralized finance. You should know that the purpose of Decentralized Finance is to replace banks that offer borrowing and lending. Of course, the regulators are very aware of this and they have been increasing their anti-Defi a massive high. A very good example of this is from France where the central bank is asking the decentralized finance protocol to register with the French authority as a financial institution and follow the regulations. The France announcement is related to the United States Treasury Department's announcement that the decentralized finance protocol is a national security risk due to its lack of KYC.

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The Security and Exchange Commission is planning on changing the legal definition of exchange so that it applies to decentralized finance protocols. This was revealed by Gary Gensler in an open meeting, after the meeting the SEC published an announcement that decentralized finance protocol should register their exchange or else they will face some serious consequences. This lets us know that government is very serious about going after the Defi protocol. I don't think they will be able to go after some Defi protocol that is really decentralized. You should know that USDC is the most popular stablecoin in the Defi protocol. Although, there is a potential that Circle's USD will be protected because the company has a connection with Blackrock. We are not sure whether we can say the same thing to other stablecoins in the US.

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