Yoni Assia, the CEO of brokerage eToro firmly believes that the upcoming DeFi regulations could disrupt the recent price rides of the hottest DeFi tokens. While the whole sense of appeal regarding DeFi or decentralized finance is that the ideal of projects has no one person or company for that matter, in charge, there still is a sense that regulation could burrow its way into the space, nonetheless.
In an interview with Decrypt, Assia was quick to say “The risks of regulation in DeFi might impact more the price of the tokens that are right now very much based on the token economics of those DeFi ecosystems which are completely open.”
eToro supports DeFi tokens of multiple types and, back in April, listed Chainlink and Uniswap (LINK and UNI respectively). eToro’s VP of business solutions, Doron Rosenblum said “Both LINK and UNI have interesting cases and remind us that not all cryptos are designed to be currencies.”
Additionally, the platform has also added tokens like Yearn.finance (YFI), Compound (COMP), and Maker (MKR). To summarize, that means eToro will be HEAVILY affected by any of the regulatory headwinds that could hit the industry. Their concern is understandable at this point.
Assia stated, “It is a part of our due intelligence to make sure that we sell digital tokens that are not deemed securities, but obviously, this changes from one sort of regulation or geography to another.”
eToro’s Success and Growth
The brokerage was also shared with Decrypt this week though it’s still privately held, and the numbers definitely indicate that the platform has gotten itself a ton of new attention since it listed more DeFi mainstays back in April. The brokerage will go public by the end of Q3, thanks to the SPAC deal.
After the start of Q2, eToro managed to register 2.6 million new users to its platform (approx.), thereby representing a 121% increase. Additionally, the platform also had $362 million in commissions (total), which is a total of 125% from the same period back in 2020.
eToro also listed Dogecoin in Q2, which is 13th among all other cryptocurrencies by a 24-hour trading volume at the moment, placing it higher than Uniswap and Chainlink. That means the platform’s user base’s increase is not just because of DeFi tokens.
According to Assia’s assessment, eToro’s bump in numbers are definitely the result of macroeconomic trends all over the world, on top of the rise of millennial investors, of course.
Upon being asked about the factors that boost eToro, he simply stated “Purchasing power diminishing overtime of fiat currency, alongside huge amounts of money printing all around the world, whether it’s Europe or the infrastructure bill in the U.S., people are realizing that governments have their hands on the trigger,”
He continued “For us, it’s very exciting to see our long term vision of opening the global markets for everyone to trade and invest in a simple and transparent way.”
Regulation Concerns and the Risk Factor
Though it has healthy Q2 figures, the wave of millennial investors eToro was talking about may just be on track for a collision with the globe’s financial services regulators.
Assia mentioned, “There’s no doubt that we’ll see more regulators looking at this industry and, in the name of consumer protection, trying to create rules and regulations to prevent problems in areas such as fraud.”
Assia’s not exactly going out on a limb here, is the SEC Chair Gary Gensler’s comments are to be believed.
Gensler said he views cryptocurrencies as a medium of exchange but not legally, at least not entirely. “To the extent that it is used as such, it’s often to skirt our laws with respect to anti-money laundering, sanctions, and tax collection,” he said as he addressed the situation at Aspen Security Forum.
He is of the opinion that many DeFi tokens tend to be unregistered securities, which in any case was a bit of troubling news for any DeFi bulls out there. He stated that “Decentralized finance platforms not only can implicate the securities laws–some platforms also can implicate the commodities laws and the banking laws.”
Now, eToro’s eyeing Q2 results are expecting them to “accelerate over time”, meaning that the trading platform might have a tussle on their hands regarding any new regulations that could impact the crypto industry, with DeFi being their center of attention, in the coming years.
Assia adds “DeFi works on the blockchain without necessarily the control of the individuals that build it, so it is a very interesting open question that we’ll see keeps on being debated over the next couple of years.”
As per Assia, Bitcoin still reigns supreme when it comes to crypto. The flagship digital currency is leading the way, no doubt about it. It makes up 17% of his own personal eToro portfolio.