The current financial system is facing severe challenges of inefficiency, which not only severely restricts economic growth but also causes tremendous waste of resources. In the face of a high-risk environment, the cost of inaction will be even more severe. Against this backdrop, decentralized finance (DeFi) is widely regarded as a disruptive financial revolution — it can effectively eliminate redundant links and unlock true economic value. DeFi is not just an alternative option; it represents the inevitable direction of evolution for the traditional financial system. The key to this transformation lies in establishing a policy framework that supports its healthy development.
📌 More than two-thirds of traditional financial institutions have set their sights on the DeFi field.
The technological infrastructure and operating systems relied upon by the traditional financial system exhibit obvious labor-intensive characteristics, requiring significant human intervention. For this reason, traditional financial institutions have been actively exploring cutting-edge technologies, seeking to reduce costs, optimize risk management, and enhance operational efficiency through technological innovation. In this process, cryptocurrencies are gradually being integrated into their strategic layout.
Traditional financial institutions view DeFi as a key solution to operational efficiency issues.
Nearly 90% of institutions are actively investing in or researching how to leverage the advantages of public blockchains.
Traditional finance is actively embracing this self-reform, as they clearly recognize the tremendous benefits that will come from transforming to DeFi-driven infrastructure.
📌 DeFi will inevitably become the cornerstone of core business.
There is a consensus in the traditional financial sector: DeFi will ultimately become an indispensable component of its core products and business lines. This recognition stems from traditional finance's firm belief that DeFi will bring substantial improvements to the financial system.
We have moved past the era when DeFi was viewed as limited to the cryptocurrency sector. Today, the traditional financial sector not only sees DeFi as an inevitable trend but also views it as an important development opportunity.
📌 The traditional financial sector is reassessing the value of blockchain.
Recent research indicates that central banks are gradually abandoning private blockchains in favor of open-source software and public networks. Currently, most traditional financial institutions believe that to fully leverage advantages such as smart contracts and asset tokenization, public permissionless blockchains are crucial.
The importance of protecting these systems is self-evident, requiring the establishment of strong incentive mechanisms to promote the development and maintenance of open public infrastructure.
📌 Traditional finance focuses on three major innovation areas.
Traditional financial institutions have shown strong interest in stablecoins, asset tokenization, and decentralized trading platforms (DEX), closely related to the significant growth in on-chain trading volumes in these areas.
These three "pillars" are necessary conditions for accelerating market development: they provide settlement assets, a universal asset representation method, and composable scalable protocols, laying the foundation for on-chain financial transaction execution.
It is expected that the development in these fields will continue to improve in the coming years.
📌 The regulatory environment is key to the development of DeFi.
Policymakers are facing a once-in-a-lifetime opportunity: to accelerate the development of DeFi through an appropriate regulatory framework. The traditional financial sector has recognized the inevitability of DeFi and its potential to improve existing systems. On this understanding, they share a common viewpoint with cryptocurrency practitioners — the latter have been striving to maintain the integrity of DeFi's open system to prevent this innovation from being stifled before it fully matures. Currently, the main obstacle for traditional financial institutions to embrace cryptocurrencies is not a lack of infrastructure or practicality, but rather the many restrictions imposed by banks and market regulators on traditional financial institutions, banks, trading platforms, and funds participating in DeFi.
The waiting period has ended. Four years have passed since the "Summer of DeFi," during which global financial markets and cryptocurrency markets have undergone a series of tests, fully demonstrating the anti-fragile characteristics of DeFi. Now is the time for regulators to open the gates and allow traditional financial institutions to embrace this innovative technology. By establishing an appropriate regulatory framework, we can unlock the true potential of DeFi and drive the financial system toward greater efficiency and inclusiveness.
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