Understanding the trading partner in decentralized finance (DeFi) protocols is crucial for financial entities, stated Joseph Chalom, BlackRock’s leader of strategic partnerships.
Chalom emphasized during the State of Crypto Summit, an event by Coinbase and the Financial Times in New York, “Who are we engaging in trade with? […] We could face legal consequences if we’re in the dark about our trading partners.” This was initially covered by CoinDesk.
He further pointed out that practices like DeFi’s automated market making, commonly abbreviated as AMM, essentially replace conventional central order books and might not offer the transparency needed.
Clear insights into the participants of a liquidity pool are essential, noted the executive from BlackRock.
Chalom’s portrayal of the rigorous regulatory landscape financial institutions navigate in markets might illuminate why traditional entities are often wary of the crypto and DeFi arena.
Understandably, the fundamental DeFi tenet of user privacy stands as a significant hurdle in this context.
BlackRock, recognized as the world’s foremost asset manager, had close to $8.6 trillion in assets under its purview by the close of 2022.
The company is a prominent backer of several exchange-traded funds (ETFs). Recently, it ventured to propose its own Bitcoin spot ETF, sparking optimism in the crypto community about the potential endorsement from the Securities and Exchange Commission (SEC).
Given BlackRock’s monumental stature, influential political ties, and its nascent foray into the Bitcoin ETF sector, it might be prudent for DeFi innovators to heed its perspectives, especially if they aim for DeFi to resonate more broadly with institutional stakeholders.
