An institutional report revealed that, in comparison, decentralized finance (DeFi) would be in the top 31 banks worldwide, taking into account the total value locked (TLV) that they currently manage.
Saying studypublished by US venture capital firm Andressen Horowitz, analyzes the current state of the ecosystem, the bitcoin market and cryptocurrencies.
In the DeFi section, the firm details that 2022 meant a year of growth. According to the report, as of May 12, the date the study sample was taken, the total TLV was $128 billion, amount that placed it in the top 31. However, it is worth noting that, as shown data of DeFi Llama, for March 5 the TLV of DeFi exceeded USD 200 billion, which fell sharply over 100 billion, to the current date, as a result of what happened with the Terra network and UST. A drop of more than 50%.
Although the values at the beginning of May were able to make DeFi climb positions within the comparison made by the firm Andressen Horowitz, It should be noted that it is still very far from the first stepswhich are dominated by the world’s largest banks.
The top 4 of the banks that lead this list is made up of American giants: JP Morgan, Bank of America, Wells Fargo and Citigroup. They each easily pass $1 trillion in assets, except for JP Morgan that exceeds 3 billion dollars. This leaves, by comparison, the current $109 billion held in DeFi well below the top 4.
Regarding the TLV, or total value locked, it is the amount of funds that a DeFi has and that are kept deposited in its smart contract. The value fluctuates depending on the value of the cryptocurrencies and tokens a DeFi holds. With the recent market crash, the TLV is affected.
DeFi has caught the attention of regulators
Although DeFi has lost a considerable part of its TLV, between the end of 2021 and the first half of 2022, the TLV remained above 200 billion. A fairly considerable value that has raised alerts among regulatorsdriven in turn by what happened in the case of Terra.
This last week CriptoNoticias has reported how several regulatory agencies have raised their voice of alert to the situation of DeFi and their “free will” by not having clear regulations. One of these cases was that of the United States Securities and Exchange Commission (SEC) which, through its president Gary Gensler, warned that investors require greater protection.
On the other side of the planet, and almost simultaneously, the executive director of Settlement and Prevention of Money Laundering in Germany, Birgit Rolphe, emphasized that a better legal framework must be offered, if DeFi is to compete with the current financial system.
It should be clarified that these requests for regulation are not something new. Although they are driven by the Terra issue, the SEC has been on record for years asking for regulatory clarity for DeFi.