At its peak in April 2022, the DeFi lending project had over $22 million in total value locked, but this figure has since dropped to around $2 million.

Decentralized finance (DeFi) lending project Yield Protocol is set to wind down by the end of this year due to a lack of demand and regulatory challenges.

The project’s December 2023 series will mature on Dec. 29, ending all borrowing and lending on the protocol, according to an announcement on Wednesday.

“We felt this decision was necessary because there is currently not sustainable demand for fixed-rate borrowing on Yield Protocol,” Yield said. “Additionally, the current regulatory environment in the U.S., combined with increasing regulatory requirements in Europe and the U.K., make it challenging for us to continue to support the Yield Protocol.”

At its peak in April 2022, Yield Protocol had over $22 million in total value locked, but this figure has since dwindled to around $2 million.

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The Bank for International Settlements alongside the central banks of France, Singapore and Switzerland tested out using wholesale CBDC to conduct cross border trading.

The Bank for International Settlements with the help from the central banks of France, Singapore and Switzerland successfully tested out cross border trading of wholesale central bank digital currencies.

With more and more nations exploring issuing a wholesale CBDC Project Mariana wanted to test out how foreign and exchange settlement might look in a world where central banks have issued a CBDC.

The Bank for International Settlements (BIS) and the central banks of France, Singapore and Switzerland successfully tested out cross-border trading of wholesale central bank digital currencies (wCBDC), according to a report on Thursday.

Project Mariana’s proof of concept used a hypothetical euro, Singapore dollar and Swiss franc wCBDCs between simulated financial institutions. The project relied on “a common token standard on a public blockchain which facilitates interoperability and seamless exchange of wCBDC across varied local payment and settlement systems maintained by participant central banks,” an accompanying press release said.

With more and more nations exploring issuing a wholesale CBDC – which enable the settlement of interbank transfers – including countries in Europe and Asia, Project Mariana wanted to test out how foreign and exchange settlement might look in a world where central banks have issued a CBDC. Banque de France said in June that wholesale CBDC’s could improve cross border payments.

“Project Mariana pioneers the use of novel technology for interbank foreign exchange markets. It successfully demonstrated that it is feasible to exchange wholesale CBDC across borders using novel concepts such as automated market makers (AMM),” said Cecilia Skingsley, Head of the BIS Innovation Hub. AMM’s are an autonomous trading mechanism and in this experiment was like a decentralised exchange.

The project even used smart contacts to enable central banks to manage their wCBDC without “the need to directly operate or control the underlying platform,” the report said.

“DeFi (decentralised finance) elements tested in the project, specifically automated market makers, could form the basis for a new generation of financial market infrastructures,” the press release said.

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The AMF wants industry stakeholders to contribute to a discussion about its views on supervising DeFi, DAOs and associated risks.

France’s top markets regulator, the Autorité des Marchés Financiers (AMF), said it supports globally coordinated rules for decentralized finance (DeFi)

In a discussion paper published Monday, the AMF, which issues licenses to crypto exchanges looking to operate in the country, shared its “preliminary thinking on the regulatory issues” raised by the decentralized and “disintermediated” protocols that make up the DeFi ecosystem.

The AMF takes a stab at defining DeFi, the decentralized governance systems known as DAOs and the automated “smart contracts” that run transactions. The paper also raises associated risks and levels of control for debate.

“Due to the cross‐border nature and reach of DeFi activities, the AMF also supports the development of a global coordinated approach towards regulation to ensure a global level‐playing field, which should both aim to protect investors and foster innovation,” the paper said.

At a meeting with reporters in May, AMF Secretary General Benoit de Juvigny flagged the paper as a contribution to EU policy development on DeFi, while noting that it will prove “complicated” to categorize participants, unlike those found in conventional finance.

Global standard-setters like the Financial Stability Board (FSB) are also looking to set up standards for the DeFi sector, with a working group for international securities regulator IOSCO set to publish recommendations by the end of the year.

“The AMF fully supports these initiatives, and intends to increase its engagement with stakeholders, both public and private, with a view to allow the emergence of a balanced regulatory framework that will help support the sound development of decentralized finance in the long run,” the paper said.

While jurisdictions are increasingly regulating centralized crypto exchanges, DeFi protocols are a challenge to supervise thanks to an apparent lack of an specific entity to target for compliance.

Industry stakeholders are invited to contribute to the AMF’s proposed discussion points until Sept. 30.

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The Securities and Exchange Commission was about to define “digital asset” but deleted it in the final version of a rule, reversing a move that might have started formalizing crypto’s role.

The U.S. Securities and Exchange Commission (SEC) took one small step backwards in regulating the crypto sector on Wednesday, when it erased what would have been its first formal definition of “digital asset” from its latest hedge fund rule.

While the SEC had initially included the definition in its 2022 proposal to overhaul mandatory disclosures for hedge funds, the securities regulator yanked it in the final rule approved by the commissioners. The agency included a footnote to explain itself:

“The commission and staff are continuing to consider this term and are not adopting ‘digital assets’ as part of this rule at this time,” the note declared.

The agency is certainly continuing to consider crypto matters, which have taken an outsized role in both its enforcement actions and its ongoing rule proposals, despite its decision to walk this one back. Last month, the regulator did virtually the opposite by reopening a previously proposed rule redefining the term “exchange” and explicitly adding decentralized finance (DeFi) to it.

That revision – which drew sharp criticism from the industry and from two of the five SEC commissioners – is one of several more recent policy moves meant to clearly ensnare crypto into existing rules. The SEC also made another proposal in February that could bar investment advisers from keeping assets at crypto firms.

The original proposed definition for a digital asset in this week’s hedge fund rule hadn’t been extensive or controversial, describing such a thing as “using distributed ledger or blockchain technology” and including “so-called ‘virtual currencies,’ ‘coins’ and ‘tokens.’”

The agency continues without digital assets holding a formal place in its lexicon, though it’s a constant topic in the speeches of Chair Gary Gensler and other SEC officials.

“The SEC is a regulator that requires transparency from its registrants, but it is continuing to withhold regulatory clarity by not defining digital assets,” said Anne-Marie Kelley, a partner at Mercury Strategies who was a longtime SEC official. She suggested the commission may have deleted the definition because “any recognition of digital assets uniqueness as a novel product weakens their litigation stance that digital assets are securities and subject to the SEC securities laws.”

Americans for Financial Reform, a consumer advocacy group that’s usually critical of the crypto sector, had applauded the SEC for setting aside a separate category in the proposed rule for hedge funds disclosing their digital assets.

“Although digital assets are frequently marketed as an alternative to the traditional finance system, hedge funds, private equity firms, and banks have been getting more involved in investing and lending those assets,” the AFR Education Fund wrote in a 2022 comment letter.

But the Securities Industry and Financial Markets Association – an industry lobbying group – complained that the definition’s wording “captures non-security digital asset classes, including commodities, bitcoin and non-fungible tokens, but it is unclear whether the intent of the definition was to capture any and all digital assets as opposed to all securities.” So Sifma had asked that the definition be more specific.

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Source: Vietnam Insider