Looking at the current situation with the fall of serval centralized exchanges decentralized finance has proven to be of a better importance than the above mentioned. In a blog post reacting to this a crypto veteran and crypto analyst says that Defi has solved the trust issue in the [financial](https://dailyhodl.com/2022/11/12/crypto-veteran-erik-voorhees-addresses-us-lawmakers-says-regulators-dont-understand-decentralized-finance/) market. 

“Isn’t that wonderful? With DeFi, financial transactions are transparent, not just to government regulators, but transparent for the entire public to see and learn from (or is that not good when the public can know things, too?).

![BE45A64193BC4479896C5C3581B9AB3A.jpeg](https://i.imgur.com/e0q50mw.jpg)
[source](https://ca.movies.yahoo.com/movies/crypto-regulation-fed-announces-roadmap-194050414.html)

With DeFi, accounts are transparent. Transfers are transparent. Trades and even complex financial derivatives are transparent. Balances are proven cryptographically. The code that executes these transactions is open-source, anyone can review it or suggest changes!”

Erik Voorhees says that what brought down FTX would never happen in Defi and it’s immunity to what crash the lending platform Celsius and any other issues with will be pegged about traditional finance. 

“The complex derivatives and custody issues which froze financial flows in 2008, back when safe, regulated financial institutions had no idea who owned what and markets collapsed under the layers of counterparty risk… these would not (can not!) happen in DeFi.

And yet what have many regulators done in response to this suite of miraculous technology that was built by brilliant, determined, principled engineers over the past decade? Have they even learned how to use it? How many of those drafting crypto laws have ever actually [executed](https://www.moneyandstate.com/blog/sophistry-and-the-savior) a DeFi loan?”

On regulation, he thinks that proper understanding should be the first priority for these regulators before trying to regulate it. 

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Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@hironakamura/decentralized-finance-solving-the-trust-problem-or-regulators-have-to-understand-defi-before-regulating)