2026-01-14 19:26:08

The institutional barrier to DeFi participation remains a critical blocker. Traditional financial players have consistently steered clear of decentralized finance due to compliance concerns—a fear that's entirely justified in the current regulatory landscape.

While recent policy proposals attempted to address this gap, they often backfire. By layering restrictive requirements onto institutions, these measures paradoxically make DeFi adoption even less attractive than before. Rather than lowering barriers, overzealous compliance frameworks end up reinforcing institutional hesitation.

The real challenge isn't just creating pathways for regulated entities into DeFi—it's crafting frameworks that don't strangle the opportunity in its cradle.

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rekt_but_vibing

· 2h ago

In other words, the more regulators try to help, the more they cause trouble. Large institutions have long been discouraged by these rules and restrictions. It seems that policymakers haven't thought things through at all, imposing so many constraints. DeFi is fundamentally about decentralization; forcing it into a centralized straitjacket is just self-contradictory. If institutions can't get in, then so be it. Small retail investors will just continue to enjoy the ride. Instead of worrying about how to make institutions comfortable, it's better to think about how to make the framework itself less suffocating. These days, everything is a dead end: open up due to risk fears, regulate and no one plays. We really need to find that balance, but unfortunately, we're still far from it. Policy, you see, is always the main character in good intentions gone wrong.

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OnchainFortuneTeller

· 12h ago

Regulation, you could say it's protection, but it also means shutting the door... Institutions want to enter DeFi, but the rules are more complicated than entering a bank. Who can handle that? Framework, framework, framework, every day just frameworks. Who actually benefits? Anyway, retail investors haven't been spared from being screwed over. Instead of piling on restrictions, it's better to think about how to keep the ecosystem alive. Right now, no one dares to play at all. Compliance anxiety, to put it simply, is fear of death, but over-defense actually stifles opportunities. It's really ironic. This game... someone needs to dare to truly loosen the reins, or it'll just be old wine in new bottles. Is it easy to establish a good framework? Regulation and freedom have always been mortal enemies.

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SatoshiSherpa

· 17h ago

Instead of discussing strategies on paper here, it's better to understand the regulatory authorities first. --- As compliance frameworks tighten, the desire of large institutions to enter is decreasing, which is ironic. --- Basically, they want institutional participation but don't want to relinquish control. That's where the contradiction lies. --- The policy proposals feel like a game of double standards; the more they adjust, the worse it gets. --- What are traditional financial institutions afraid of? It's nothing more than the fear of being cut off. Now that the thresholds are so high, why would they still come? --- Framework designers have too limited imagination, resulting in one word: blockage. --- Honestly, instead of imposing restrictive requirements, it's better to create a sandbox testing zone to see if institutions can make it work. --- It's not a bad thing for institutions to enter DeFi; why be so defensive about it? --- Overly strict compliance is a joke. Large institutions have compliance teams anyway, but small and medium projects get stuck.

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WagmiOrRekt

· 18h ago

In simple terms, tighter regulation is actually driving institutions away—ironic, isn't it? The compliance framework is designed like a sieve, full of holes and yet self-righteous. Honestly, instead of creating these empty frameworks, it's better to genuinely lower the entry barriers. Everyone is just talking on paper, no one has considered the real needs of institutions. That's why big players prefer to hide overseas rather than come in; even gamblers are smarter than regulators. Institutions: I want to enter DeFi / Regulators: No, we impose a bunch of restrictions / Institutions: Then forget it / Everyone: ? Bear markets are like this—the more you fear death, the faster you die. Instead of doing all this, it's better to let the market educate participants on its own. It seems that the system designers simply don't understand what DeFi really needs.

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DegenDreamer

· 18h ago

Regulation is becoming more and more complicated, and large institutions are actually more afraid to act. Isn't this shooting themselves in the foot? --- Basically, they want to have their cake and eat it too, but end up with nothing. --- Do the framework designers really understand DeFi? It feels completely in the opposite direction. --- Instead of layering on restrictions, it's better to loosen up directly. Institutions will come naturally. --- That's why DeFi is still growing wild; once policies intervene, it collapses. --- Compliance and innovation are actually natural enemies; you can never choose between them. --- Institutions are actually just waiting, waiting to see who breaks the ice first. The risk is too high. --- The problem isn't with DeFi itself; policymakers simply don't understand this stuff. --- No wonder big funds are still lying flat in traditional finance. Who wants to deal with all these regulations?

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CompoundPersonality

· 18h ago

Once regulatory measures are implemented, they directly scare away big institutions. This approach is truly brilliant... The compliance framework was originally intended to lower the threshold, but it ended up being raised instead. It's a classic case of policy backfire. Rather than blocking institutions outright, it's better to let them in first and then regulate. Right now, it's like shooting oneself in the foot. The essence of DeFi is decentralization. Why impose a bunch of restrictions? It would be more practical to provide clear red lines. Institutions are not fools. When they see restrictive requirements, their first reaction is to bypass them... better not to come in at all.

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