• DeFi Regulation May Have an Impact on the Prices of the Most Popular Ethereum Tokens: CEO of eToro

  • While the entire appeal of the DeFi (decentralized finance) space is the ideal of projects and protocols with no single company or person in charge, which adherents argue should make them more difficult to regulate than centralized businesses like Coinbase, there is a sense that regulation is coming to the space regardless.

    And Yoni Assia, CEO of eToro, feels that regulation might put a stop to the current price surges of the hottest DeFi coins.

    “The concerns of regulation in DeFi may have a greater impact on the price of the tokens, which are currently very much based on the token economics of those DeFi ecosystems that are entirely open,” Assia explained.

    EToro already allows you to trade multiple DeFi tokens. It listed Chainlink (LINK) and Uniswap in April (UNI). “Both LINK and UNI offer unique use cases and remind us that not all cryptos are created to be currencies,” said Doron Rosenblum, eToro’s VP of business solutions, at the time.

    DeFi tokens such as Yearn.finance (YFI), Compound (COMP), and Maker have also been introduced to the platform (MKR). All of this means that eToro will be impacted by any legislative changes that influence the DeFi industry.

    “It is part of our due diligence to ensure that we offer digital tokens that are not deemed securities, but obviously, this varies depending on the type of law or geography,” Assia explains.

    eToro’s growth and prospects

    The brokerage, which is still privately held but hopes to go public by the end of the third quarter through a SPAC sale, revealed its Q2 statistics with us this week, and the numbers show the platform has gained a lot of additional attention since it listed more DeFi stalwarts in April.

    Since the beginning of the second quarter, eToro has added about 2.6 million new members to its platform, marking a 121 percent growth over the same period in 2020. Furthermore, the platform earned $362 million in total commissions, a 125 percent increase over the same period in 2020.

    Also in Q2, eToro featured Dogecoin, which presently ranks 13th among all cryptocurrencies in terms of 24-hour trading volume—higher than both Uniswap and Chainlink, indicating that the platform’s solid user growth is not just due to its embrace of popular DeFi coins.

    According to Assia, eToro’s growing popularity is a result of global macroeconomic factors as well as the rise of young investors.

    When asked about the factors boosting his brokerage, Assia says, “Purchasing power of fiat currency diminishing over time, alongside huge amounts of money printing all over the world, whether it’s Europe or the infrastructure bill in the United States, people are realizing that governments have their hands on the trigger.” “It’s incredibly thrilling for us to see our long-term ambition of opening global markets for everyone to trade and invest in a straightforward and transparent manner come to fruition.”

    Regulation threats continue to loom.

    Despite eToro’s positive Q2 results, the same wave of young investors may be heading for a run-in with the world’s financial regulators.

    “There is no doubt that more regulators will be looking at this industry and, in the name of consumer protection, trying to implement rules and laws to prevent problems like fraud,” Assia says.

    If the recent words of newly appointed SEC Chair Gary Gensler are any indication, Assia is not stepping out on a limb. Earlier this month, Gensler stated that cryptocurrencies, in his opinion, frequently serve as a medium of exchange—but not always lawfully. “To the degree that it is utilized as such, it is frequently to circumvent our rules about anti-money laundering, sanctions, and tax collection,” Gensler remarked recently at the Aspen Security Forum.

    He also stated that he believes many DeFi coins are unregistered securities, which would undoubtedly worry DeFi bulls. “Not only can decentralized finance platforms implicate securities regulations, but some platforms can also implicate commodities laws and banking laws,” he argues.

    If, as Assia asserts, eToro expects its Q2 results to “accelerate over time,” the trading platform will have to deal with any new rules that may affect the crypto industry—and DeFi in particular—in the coming years.

    “DeFi works on the blockchain without necessarily having the control of the people who build it, so it’s a very intriguing open subject that we’ll see continues to be contested over the next couple of years,” Assia says.

    In Assia’s opinion, Bitcoin is still the king of cryptocurrency. The flagship cryptocurrency leads the way, accounting for 17% of his personal eToro portfolio.

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