Decentralized finance (DeFi), one of the fastest-growing ecosystems in the cryptocurrency market, has long been a dilemma for regulators, given the decentralized nature of the space.
In 2022, United States regulators paid special focus to the nascent area with significant attention to ending the anonymous nature of the ecosystem.
DeFi protocols allow users to trade, borrow and lend digital assets without having to go through an intermediary. DeFi ecosystems by nature are decentralized with the majority of projects being run by automated smart contracts and decentralized autonomous organizations (DAOs). Most DeFi protocols don’t require heavy Know Your Customer (KYC) requirements, making way for traders to trade anonymously.