Regulating DeFi Staking in the Web3 Ecosystem: Implications for the Future of Digital Markets and Private Funding
UK policymakers and regulators are currently grappling with the classification of DeFi staking as either lending or a collective investment scheme. The Web3 foundation, built on DeFi, is a significant decentralized global industry network projected to reach a value of $4.6 billion by 2023 and $178 billion by 2033. The regulation of DeFi staking must be proportional to avoid risking funding from developers, entrepreneurs, and investors. Staking and lending in the DeFi ecosystem involve different activities and risks and should not be subject to the same regulations. The UK is taking steps to be a global leader in regulating staking, but policymakers should avoid developing generalized regulations that could disincentivize the use of proof-of-stake mechanisms.
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