The decentralization of financial infrastructure driven by blockchain technology enables elimination of intermediary entities and replaces them with software protocols. This notion is commonly called decentralized finance (“DeFi”). Considering this disintermediation, a fundamental question is how DeFi should be regulated.
Could embedded supervision, that involves implementing regulatory instruments into the technological infrastructure, be an effective regulatory tool? Or is there a more permissive alternative that can regulate DeFi without undermining innovation in DeFi?
Overall, there appears to be no qualitative empirical-based legal literature on DeFi regulation that demonstrates how different stakeholders and experts think. Considering that DeFi regulation is subject to rapid and frequent development, it is hard to find definitive answers to all open questions at this point.