Decentralized Finance (DeFi) is one of the most talked-about aspects of the cryptocurrency industry today. The sector has seen tremendous growth, with new projects and applications emerging almost daily.
However, as the DeFi space expands, so do the scams. An analysis by BanklessTimes.com reveals that more than 10% of all the DeFi tokens in the market are fraudulent. To be precise, 183,265 tokens in the DeFi protocols are a scam.
Speaking on the data, the CEO of BanklessTimes, Jonathan Merry, said,
Some popular types of scams include rug pull, Ponzi schemes, pump-and-dump schemes, and exit scams.
As the DeFi space continues to grow, so does the need for proper regulation. Several regulatory bodies, such as the SEC and CFTC in the US, are already working on developing policies that will safeguard investors from fraudsters.
Regulator’s Role in Reducing Scams
The regulatory community responds with various measures to cut and thwart DeFi fraud. The Biden Administration has urged clear control of cryptos and blockchain-based economies. The measure aims to reduce digital asset abuse and fraud.
Two US senators presented bipartisan legislation in June 2022 to create a regulatory framework for crypto markets. The bill encouraged responsible financial innovation, flexibility, openness, and comprehensive consumer safeguards. Moreover, the bill categorized most digital assets as commodities, giving the CFTC power over digital assets’ spot markets. Coinbase, Kraken, and the Crypto Council…