- The Acting U.S. Comptroller of Currency, Brian P. Brooks, published an op-ed in the Financial Times, claiming that he is optimistic about the future of decentralized finance (DeFi)
- He also drew comparisons between DeFi and self-driving cars
- Brooks also highlighted the risks involved in DeFi protocols in terms of regulation
Brian Brooks, the Acting U.S. Comptroller of Currency, describes himself as an optimist for decentralized finance (DeFi) through his op-ed write-up for the Financial Times.
DeFi is Paving the Way For “Self-Driving” Banks – Brooks
Brian Brooks, the previous Coinbase chief turned Comptroller of the Currency, has composed a commentary about DeFi for the Financial Times. As indicated by him, DeFi conventions that can work without human intervention present “new dangers” from an administrative stance. He, therefore, posed the analogy of the development of self-driving cars, bringing out the advent of a similar evolution of “self-driving” banks.
He suggested that corresponding regulations for the latter could be implemented.
Significantly, Brooks accepts the importance of figuring collateral carefully and giving advances algorithmically, as crypto DeFi presently doesn’t come without hazards. As an example, he referred to liquidity hazard, a high-recurrence trade, that could quicken value self-offs. All in all, believing a calculation to green light liquidations could wind up in blunders like manipulations and flash crashes.
Brooks is a Self-Described Optimist for DeFi Banks
While he doesn’t promote the well known focal points of decentralization itself, Brooks is supportive of DeFi banks working exclusively through calculations and algorithms, without individuals having to put in constant work. He accepts that DeFi innovation can be utilized to battle disparities in banks and money markets.
On the contrary, the Comptroller also stated that computers are incapable of assessing a lot of insurance or liquidity related hazards with as much precision or comprehensibility as humans. Regardless, Brooks takes note of these dangers being similar to risks previously observed by other arising innovations, such as self-driving vehicles, or even the current financial framework.
The principle barrier to giving a public bank contract to an algorithmic, decentralized framework is that sanctions should be given to people, not computers, according to Brooks. As such, referring to the current enactment and legislation based on an ancient technology, he mentioned that they do not accommodate DeFi bank contracts.
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