Paradigm, a research-driven investment firm and Paradigm, a research-driven investment firm. They further emphasize the need for inclusivity within this regulatory framework. The UK’s ambition is to be a world-leading hub for digital asset innovation. They don’t want to stifle innovation, they want to increase productivity and create economic returns from cryptocurrency. Paradigm’s response to the Financial Conduct Authority’s (FCA) Discussion Paper 25/1 on the regulation of cryptoasset activities. Specifically, they underscored important measures to prevent while allowing for rapid growth and innovation of DeFi to take root in the United Kingdom.
Paradigm’s response highlights the role DeFi can play in democratizing access to traditional financial (TradFi) markets. According to the firm, over 66% of TradFi firms are currently looking to integrate DeFi solutions. They see and understand that DeFi can remove all the inefficiencies that exist today.
DeFi has some major advantages to bring over to TradFi, namely cost reductions, improved operational efficiency and increased transparency. These new benefits have the potential to enhance the reach and effectiveness of these new alternative financial services. As America moves closer to legislation on stablecoins and market structure and the rest of the world charges ahead with DeFi, the UK risks falling behind if it does not embrace DeFi.
Paradigm’s submission emphasizes that smart DeFi regulation must strike a careful balance. It supports policies and rules that encourage innovation while addressing potential risks. The firm believes that by engaging with industry experts and adopting flexible frameworks, the UK can position itself as a leader in the global DeFi landscape.
The UK wants to position itself as a global centre for digital asset innovation. It’s great to see multiple administrations support this ambitious goal. Reaching this vision will require us to lean into new technologies, such as DeFi. Paradigm’s answer to the FCA is a call for a regulatory environment that encourages responsible growth while protecting consumers. Additionally, it risks stifling innovation across the DeFi sector.
