Web3 Summit by Fintech: Experts Share Insights on Web3
Prominent voices in the industry are urging governments to establish regulations for Web3 assets at the earliest opportunity, rather than waiting for the field to reach its zenith, considering its ever-evolving nature. During the Dubai FinTech Summit on Monday, a panel discussion provided a platform to discuss these perspectives and viewpoints.
Ebru Pakcan, Managing Director for the Middle East and Africa at Citi UAE, emphasized that officials in many developed markets have been slow to act due to their ongoing efforts to comprehend the intricacies of Web3. However, she acknowledged that the challenge lies in the sector’s constant generation of new ideas. The longer it takes to establish a regulatory framework, the more exceptions arise and proliferate. Pakcan stressed the importance of swift action in this realm.
The insights shared by experts highlight the need for cautious rule-making concerning Web3 assets. These frameworks are crucial for addressing emerging challenges and harnessing the potential offered by this innovative sector.
The Significance of Web3
Industry experts assert that blockchain technology, decentralization, openness, and enhanced user experience are pivotal elements of Web3, the latest iteration of the World Wide Web. According to Market Research Future, the Web3 market is projected to be valued at approximately $6.2 billion by 2023, with an average annual growth rate of 44.6% from 2023 to 2030.
While experts acknowledge that there is still work to be done in the traditional finance sector, they emphasize the importance of governments and society as a whole contemplating responsible growth of digital assets within the Web3 space. Ebru Pakcan underscores the necessity of addressing potential risks and issues faced by consumers, particularly those already disadvantaged in terms of financial inclusion.
Pakcan stated, “Recent examples demonstrate that consumers are often the most vulnerable, as they lack sufficient access to financial resources.”
The emergence of Web3 presents both new opportunities and new obligations. It necessitates deliberate deliberation and proactive measures to ensure equitable access, protection, and prosperity within the digital asset landscape.
Jonathan Hayes on DeFi and its Utility in Financial Systems
Jonathan Hayes, Head of Digital Assets Development at Swiss private bank Julius Bär, recently discussed the fundamental distinctions between the existing financial system and Web3, specifically decentralized finance (DeFi). Hayes acknowledged the abundant creativity within DeFi but also highlighted its challenges in responsible financial management and preventing money laundering.
Hayes described DeFi as a self-contained realm where speculation on virtual assets thrives but lacks ties to real-world assets. However, he emphasized that financial services would play a vital role in the tokenization of assets and their integration into blockchain systems.
“On the other hand,” Hayes remarked, “banks may not be the most innovative organizations. They prioritize stability and conduct business within controlled parameters.”
Hayes believes that the autonomous financial system can facilitate the development of new products and services within the financial services industry. However, he cautioned that achieving a mutually beneficial partnership would be a gradual and time-consuming process.
The ongoing discourse highlights the contrasting nature of traditional financial institutions and Web3’s DeFi, underscoring the potential for innovation while striving to strike a balance between novel ideas and regulatory compliance. This ensures that financial practices within the digital asset realm are secure and trustworthy.
Web3 Aims to Eliminate the Need for Trust, Emphasizing Regulatory Oversight
Staci Warden, CEO of the Algorand Foundation, posits that the core concept behind a Web3 blockchain-based environment is the elimination of the need for trust. Recent events within the crypto space, however, have been marred by fraudulent activities occurring within the realm of digital assets.
Warden emphasizes the importance of pursuing and treating scammers as equal fraudsters, regardless of their medium. In Web3, blockchain technology differentiates itself from other financial services by enabling multiple parties to record events on a shared ledger. With the absence of a centralized authority, Web3 relies on this decentralized approach.
Centralized Finance, DeFi, and the Trust Factor Umar Farooq, the CEO of Onyx by JP Morgan and the Global Head of Financial Institutional Payments, notes that the majority of users in the field have limited technological knowledge. While banks and regulatory bodies are built upon trust, they still encounter problems and make mistakes on a regular basis. In this context, Farooq stresses the importance of implementing rules to prevent individuals from solely relying on centralized finance instead of embracing the potential of DeFi.
Farooq warns, “Without proper regulation, oversight, and global clarity, fraud will persist, and individuals will continue gravitating towards centralized finance.”
These discussions underscore the significance of establishing trust and maintaining regulatory frameworks within the Web3 ecosystem. Such measures are essential to combat fraud and ensure the safety of digital asset transactions.
