DeFi is at war. TVL is at its pre-pandemic level of $50 billion, along with the prices of BTC and ETH. Rising inflation is driving the cost of money out of fintech innovation investment and raising capital is becoming more difficult. Many fintechs are facing downsizing and staff layoffs while their customers are facing rising mortgage, energy, and food costs.

Regulators cannot seem to move fast enough with crypto spot market and stablecoin regulation and have resorted to the blunt tools of enforcement as a shot across the bow of the industry. OFAC and Tornado Cash, and the CFTC’s recent enforcement action against bZEROx have sent a chill up the spines of DeFi network stakeholders.

Regulators do not appear to have an expressed objective to regulate algorithms, but in the absence of individuals or legal entities to hold accountable, they must be seen to be taking action against hackers, cyber-syndicates, and state-sponsored cyber-attacks.

The Regulator Is Not The Enemy At The Gates Of DeFi

DeFi is at war with hackers.

The industry is on notice that it needs to move to a war footing to better protect its customers, staff, and shareholders from the damage that hackers achieve, both financially and reputationally. This was one of the big messages coming out of the Fintech Nexus Merge conference in London last week.