Hedi Navazan, the chief compliance officer at 1inch, emphasizes the necessity of a clear regulatory framework for Web3 to address innovation bottlenecks and user safety in decentralized finance (DeFi). Custom, risk-based approaches are essential to balance innovation, security, and compliance in the industry. The article discusses the challenges faced by DeFi due to regulatory scrutiny, highlighting recent lawsuits against major crypto platforms. It also stresses the importance of self-regulation and the need for regulatory bodies to understand DeFi's architecture before implementing restrictive measures. The piece further explores the impact of regulatory frameworks like MiCA on institutional adoption of DeFi and the potential benefits of regulatory sandboxes in fostering innovation. Overall, clear regulations are crucial for promoting trust, attracting investments, and facilitating the integration of DeFi with traditional banking systems. Read more AI-generated news on: https://app.chaingpt.org/news