Not all protocols are equal
The potential for decentralized development should not be underestimated 
Decentralized [email protected] Event organizer 
Financial industry. However, there are some concerns about whether regulation is necessary and, if so, how it will affect the future of the DeFi industry. It is unlikely that regulation will be a realistic option, but it will not necessarily be a requirement.
The current state of DeFi regulation
Following some recent changes in the decentralized finance sector, the need for regulation is becoming more apparent. Many protocols have come and gone – either remote crawling, theft, hacking, etc. And they left investors and speculators penniless. However, there are many protocols that do not suffer from such incidents, and they bring value to their customers.
Most people agree that some level of regulation may be needed. Many DeFi protocols do not expect a non-custodial approach. In particular, they control user funds, and people should trust these providers to conduct proper business conduct. For example, separation of client and company funds would be a welcome requirement for such babysitting providers. Although some protocols do this by default, it's worth seeing as things improve.
However, it should be noted that not all DeFi protocols are created equal. Some protocols pose less or different risks than others, just like TradFi companies A and B are not two peas in a pod. There are different levels of risk in traditional and decentralized finance. This may indicate that there will be different levels of regulation in DeFi moving forward, and some projects may not need regulation at all.
Providers who want to establish more credibility and reputation should choose a control method regardless of the service they provide. However, not everyone has the budget or knowledge to pursue permits, and those projects should still be allowed to exist either way. There is a difference between modeling best practices in the industry and over-indulging innovation.
DeFi compliance as a service
A group aiming to bring more legitimacy to decentralized finance may offer one possible solution. In particular, the team works with Swiss regulators, Mastercard APAC and other entities to address regulatory, accountability and security issues. Fruit not only improves existing DeFi protocols, but also enables a way for TradFi companies to explore decentralized finance opportunities.
Moreover, the protocol provides a framework for building DeFi solutions in compliance with the necessary regulations. The team calls this “reverse decentralization,” and it's a non-invasive approach to help developers and teams explore this option. If decentralized finance is to be mainstreamed, compliance will be essential. Incorporating risk controls, security, KYC/AML procedures and anti-price manipulation measures are just a few of the considerations to consider.
The introduction of regulation may lead to a few countries banning decentralized finance altogether. China has “banned” DeFi and Russia may take a similar approach. As the industry still presents “limited risks” to the main financing, other states want to maintain a favorable approach to regulatory mechanisms.
Closing thoughts
It makes sense to impose regulations on lending and borrowing companies or high-risk financial services. However, things are slightly different when it comes to farm production, liquidity, etc. Those parts remain unregulated and are – currently – considered accessible through non-custodial providers.
As regulation is a broad concept, mediators may not always be available, so there is still a long way to go.
