ConsenSys, a leading Ethereum-focused development studio, has recently submitted a recommendation to UK authorities calling for a targeted approach to regulating blockchain applications. The company emphasizes the importance of safeguarding DeFi (decentralized finance) users while maintaining the core infrastructure of the blockchain.
In a letter released on Tuesday, ConsenSys advocates for specific regulation of activities and services, rather than imposing broad limitations on the entire blockchain infrastructure.
Shifting Towards Nuanced Regulation Method for Public-Facing Blockchain Applications
ConsenSys suggests a more nuanced and targeted approach to regulating public-facing blockchain applications. The firm draws a parallel with the regulatory framework of Web2, the second generation of the internet.
By focusing on the products and services that pose potential risks, ConsenSys aims to avoid hampering innovation and progress.
Scrutinizing Control and Risk Factors
ConsenSys highlights the need to scrutinize the level of control exerted by individuals or groups over DeFi applications.
They caution against situations where parties can manipulate smart contracts or gain access to private keys, as these present significant risks. ConsenSys asserts that regulating these specific areas will contribute to a safer environment for users while fostering innovation and promoting decentralization.
Addressing Data Integrity Challenges
One of the challenges in blockchain technology is maintaining data integrity outside the blockchain itself. ConsenSys points out that while blockchain data can be audited and verified, the same level of trustworthiness is not extended to real-world data or data introduced via oracles.
Therefore, any regulatory framework should take these concerns into account to ensure a comprehensive approach to blockchain regulation.
Read More:
Tether To Engage in Bitcoin Mining Activities in Uruguay : Powered By Renewable Energy
Former manager at Coinbase Reaches a Settlement on SEC Charges Related to Insider Trading