Crypto Issues: The Scalability of DeFi and Digital Assets, and the Need for Domestic and International Regulation
Host: Anchor Choo Hye-jung
Guest: Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm
Q. First, can we start by discussing what DeFi is?
- DeFi (Decentralized Finance)
- Financial services provided through blockchain technology without the control of a central institution
Q. What are some examples of DeFi?
- NFT marketplace 'OpenSea'
- The Luna-Terra DeFi system
Q. What is the difference between Centralized Exchanges (CEX) and Decentralized Exchanges (DEX)?
Q. What is the difference between claims and property rights?
- Claims provide specific rights and obligations between creditors and debtors
- Property rights involve ownership based on possession of a specific item
- In coin transactions, users deposit KRW or coins according to their contract, thereby holding claims
- "In case of exchange hacking or bankruptcy, the assets must be distributed equally"
- "Decentralized hardware wallets are unaffected by exchange bankruptcy"
Q. Is the SEC pushing for DeFi regulation?
- The SEC is promoting DeFi regulation, and the U.S. Congress is preparing a bill on stablecoins
Q. Is DeFi included in the scope of virtual asset service providers (VASPs)?
- DeFi is not included in the scope of VASPs under the Special Financial Information Act
- "There are no clear legal regulations for DeFi at this time"
- A U.S. SEC specialist commented, "Regulating DeFi may lead to the extinction of new technologies"
- There are internal disagreements within the U.S. SEC regarding regulation of decentralized exchanges
Q. Is there a need for DeFi regulation?
- Investors are aware of the risks involved in DeFi investments but proceed due to high potential returns
- "Regulation is needed for hacking prevention and mandatory disclosure"
Q. What are some examples of risks in DeFi investments?
- "High returns are often used as bait to attract investors to secure liquidity"
- "Depending on the product design, investors can adopt various strategies"
- "Investors may face losses if the price of the coin used in DeFi drops sharply"
Q. What is the stance of regulatory agencies?
- "Regulatory agencies aim to protect investors"
- "Unfair behavior by coin operators can lead to delisting at the discretion of the exchange"
Q. What would be the correct direction for DeFi regulation?
- "DeFi provides a new investment avenue that ensures individual freedom"
- Since DeFi lacks a supervisory body, investor protection is currently insufficient
- "Excessive regulation of the DeFi market should be avoided"
