Mark Carney: prediction

Transcript context

…How should we regulate decentralized finance, DeFi as they call it? Another great question. I think the first thing is recognizing that that is a real possibility, that we will have a world which is a combination of centralized and decentralized finance, that there is potential value. I hedge it a bit because I can see the potential, but I haven’t really seen it at scale being applied in so-called native currencies that exist and facilitate decentralized finance and the smart contracts that are part of that. There’s a couple of obvious things we have to do in terms of regulation. Going in and out of decentralized finance, which is classic Know Your Customer, anti–money laundering, counterterrorist financing, those boundaries between the two. The resilience of the institutions that operate within decentralized finance. Thirdly, the nature of the crypto asset that’s used as the, quote, “native currency” and its resilience, its supply algorithm, whether or not it’s backed, whether or not it is itself a stablecoin. If it is a stablecoin, who oversees the nature of that stablecoin. There are some that had represented — as you probably know, I’m sure — that they were fully backed by cash, and it turns out that they’re very much not. There’s a conduct, anti–money laundering, Know Your Customer element going in and out of DeFi, and then there’s the resilience of the DeFi segment itself. As you know, there are truly anonymous forms of crypto, whether we like it or not. How many degrees of freedom do we really have in regulating non-anonymous crypto given that people have the option of switching into anonymous crypto?…

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