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The DeFi sector boom also known as the ‘DeFi summer’ has been speeding past at unexpected levels. Several players are entering the markets and betting their funds on different protocols. Investors include small-time traders, whale traders, and large institutional investors who are entering the DeFi space. But now organizations from the traditional finance space are also not far behind.
A new study conducted by Crypto.com and BCG Platinion has revealed that traditional finance companies are also exploring the use of DeFi, not just to up their offerings but also to create alternative streams of income generation. In a report jointly published by the two concerns, 400 companies in different sectors like insurance, trading, and banking across Europe were considered for the survey.
The survey was conducted in order to ascertain the challenges associated with the adoption of DeFi as well as future opportunities. In this survey, it was outlined that there is an increasing interest in DeFi among these traditional institutions. About 86% of the companies have already started implementing as well as begin their analysis of crypto-based technologies in order to create inwards for service improvements. Kris Marszalek, co-founder, and CEO of Crypto.com said,
“The research shows that DeFi’s adoption is not limited to just the blockchain industry; traditional financial institutions of all sizes are viewing DeFi not as a competitive threat but rather as a valuable instrument to delivering more decentralized, efficient financial services. This is shown in their warming attitudes towards DeFi and its integral role in future plans for the vast majority of them.”
Over the last few days, we have seen large institutional investments in Bitcoin while many organizations did not express an open interest in DeFi. This is because they viewed Bitcoin as a major store of value which would give them returns in the future. But now organizations are also looking at DeFi as an option to explore mainly due to its technological advances and the opportunity to earn income.
In the survey, companies of all sizes and values were included. In fact, 70% of the companies which were surveyed had a balance sheet above $12.9 billion. And these businesses have either considered the option seriously or have already implemented the option of DeFi in some form or the other in their business.
As mentioned earlier, the survey was primarily undertaken to ascertain issues as well as opportunities related to DeFi and the study highlighted that fund security remained a significant reason that is putting a stoppage to wide adoption. For about 70% of the companies surveyed the safety of the funds remains a nagging concern. They believe that fraudulent issues have to be curbed if the sector has to progress. Another major barrier to adoption with respect to DeFi adoption is the fact that there is no regulatory framework guiding the sector and its practices. About 61% of the surveyed companies believe that not having a regulatory environment can be a threat and an obstacle to adoption.
But despite these barriers, corporations have given their vote of confidence to DeFi.