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Cryptocurrencies and Decentralized Finance (DeFi) / Igor Makarov, Antoinette Schoar.
- Format:
- Book
- Author/Creator:
- Makarov, Igor.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w30006.
- NBER working paper series no. w30006
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Cryptocurrencies and Decentralized Finance
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- The paper provides an overview of cryptocurrencies and decentralized finance. The discussion lays out potential benefits and challenges of the new system and presents a comparison to the traditional system of financial intermediation. Our analysis highlights that while the DeFi architecture might have the potential to reduce transaction costs, similar to the traditional financial system, there are several layers where rents can accumulate due to endogenous constraints to competition. We show that the permissionless and pseudonymous design of DeFi generates challenges for enforcing tax compliance, anti-money laundering laws, and preventing financial malfeasance. We highlight ways to regulate the DeFi system which would preserve a majority of benefits of the underlying blockchain architecture but support accountability and regulatory compliance.
- Notes:
- Print version record
- April 2022.
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