US Republican lawmakers call on Treasury to explain recent cyber breach  

Opinion by: Hedi Navazan, chief compliance officer at 1inchWeb3 needs a clear regulatory system that addresses innovation bottlenecks and user safety in decentralized finance (DeFi). A one-size-fits-all approach cannot be achieved to regulate DeFi. The industry needs custom, risk-based approaches that balance innovation, security and compliance.DeFi’s challenges and rulesA common critique is that regulatory scrutiny leads to the death of innovation, tracing this situation back to the Biden administration. In 2022, uncertainty for crypto businesses increased following lawsuits against Coinbase, Binance and OpenSea for alleged violations of securities laws.Under the US administration, the Securities and Exchange Commission agreed to dismiss the lawsuit against Coinbase, as the agency reversed the crypto stance, hinting at a path toward regulation with clear boundaries.Many would argue that the same risk is the same rule. Imposing traditional finance requirements on DeFi simply will not work from many aspects but the most technical challenges.Openness, transparency, immutability, and automation are key parameters of DeFi. Without clear regulations, however, the prevalent issue of “Ponzi-like schemes” can divert focus from effective innovation use cases to conjuring a “deceptive perception” of blockchain technology. Guidance and clarity from regulatory bodies can reduce significant risks for retail users.Policymakers should take time to understand DeFi’s architecture before introducing restrictive measures. DeFi needs risk-based regulatory models that understand its architecture and address illicit activity and consumer protection. Self-regulatory frameworks cultivate transparency and security in DeFiThe entire industry highly recommends implementing a self-regulatory framework that ensures continuous innovation while simultaneously ensuring consumer safety and financial transparency. Take the example of DeFi platforms that have taken a self-regulatory approach by implementing robust security measures, including transaction monitoring, wallet screening and implementing a blacklist mechanism that restricts a wallet of suspicion with illicit activity. Sound security measures would help DeFi projects monitor onchain activity and prevent system misuse. Self-regulation can help DeFi projects operate with greater legitimacy, yet it may not be the only solution.Clear structure and governance are keyIt’s no secret that institutional players are waiting for the regulatory green light. Adding to the list of regulatory frameworks, Markets in Crypto-Assets (MiCA) sets stepping stones for future DeFi regulations that can lead to institutional adoption of DeFi. It provides businesses with regulatory clarity and a framework to operate.Many crypto projects will struggle and die as a result of higher compliance costs associated with MiCA, which will enforce a more reliable ecosystem by requiring augmented transparency from issuers and quickly attract institutional capital for innovation. Clear regulations will lead to more investments in projects that support investor trust.Anonymity in crypto is quickly disappearing. Blockchain analytics tools, regulators and companies can monitor suspicious activity while preserving user privacy to some extent. Future adaptations of MiCA regulations can enable compliance-focused DeFi solutions, such as compliant liquidity pools and blockchain-based identity verification.Regulatory clarity can break barriers to DeFi integrationThe banks’ iron gate has been another significant barrier. Compliance officers frequently witness banks erect walls to keep crypto out. Bank supervisors distance companies that are out of compliance, even if it’s indirect scrutiny or fines, slamming doors on crypto projects’ financial operations. Clear regulations will address this issue and make compliance a facilitator, not a barrier, for DeFi and banking integration. In the future, traditional banks will integrate DeFi. Institutions will not replace banks but will merge DeFi’s efficiencies with TradFi’s structure.Recent: Hester Peirce calls for SEC rulemaking to ‘bake in’ crypto regulationThe repeal of Staff Accounting Bulletin (SAB) 121 in January 2025 mitigated accounting burdens for banks to recognize crypto assets held for customers as both assets and liabilities on their balance sheets. The previous laws created hurdles of increased capital reserve requirements and other regulatory challenges.SAB 122 aims to provide structured solutions from reactive compliance to proactive financial integration — a step toward creating DeFi and banking synergy. Crypto companies must still follow accounting principles and disclosure requirements to protect crypto assets. Clear regulations can increase the frequency of banking use cases, such as custody, reserve backing, asset tokenization, stablecoin issuance and offering accounts to digital asset businesses.Building bridges between regulators and innovators in DeFiExperts pointing out concerns about DeFi’s over-regulation killing innovation can now address them using “regulatory sandboxes.” These dispense startups with a “secure zone” to test their products before committing to full-scale regulatory mandates. For example, startups in the United Kingdom under the Financial Conduct Authority are thriving using this “trial and error” method that has accelerated innovation.These have enabled businesses to test innovation and business models in a real-world setting under regulator supervision. Sandboxes could be accessible to licensed entities, unregulated startups or companies outside the financial services sector.Similarly, the European Union’s DLT Pilot Regime advances innovation and competition, encouraging market entry for startups by reducing upfront compliance costs through “gates” that align legal frameworks at each level while upgrading technological innovation.Clear regulations can cultivate and support innovation through open dialogue between regulators and innovators.Opinion by: Hedi Navazan, chief compliance officer at 1inch.This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

El Salvador, the world’s first country to adopt Bitcoin as legal tender, is still acquiring Bitcoin despite comments from the International Monetary Fund (IMF) appearing to claim the opposite.The treasury of El Salvador acquired 7 Bitcoin (BTC) worth over $650,000 in the seven days leading up to April 27, blockchain data from El Salvador’s Bitcoin Office shows.When asked about the country’s Bitcoin investments, Rodrigo Valdes, director of the Western Hemisphere Department at the IMF, said that the country continues to comply with its agreement to halt government Bitcoin accumulation.El Salvador Bitcoin holdings. Source: El Salvador Bitcoin Office“In terms of El Salvador, let me say that I can confirm that they continue to comply with their commitment of non-accumulation of Bitcoin by the overall fiscal sector, which is the performance criteria that we have,” said Valdes during an April 26 press briefing.Related: Crypto sentiment recovers, but weekend liquidity risks remain“But on top of that, I think this is very important for the discussion in El Salvador,” he added. “The program of El Salvador is not about Bitcoin. It’s much more, much deeper in structural reforms, in terms of governance, in terms of transparency.”In December 2024, El Salvador struck a deal with the IMF for a $1.4 billion loan, which required the government to drop Bitcoin’s status as a legal tender and stop its BTC accumulation.Related: Serbia’s Prince Filip says Bitcoin is being stifled, expects huge rallyFlexible interpretation leaves room for Bitcoin buysThe IMF’s agreement may still enable room for purchases through non-governmental entities, according to Anndy Lian, author and intergovernmental blockchain adviser.“The IMF’s ‘flexible interpretation’ suggests purchases may involve non-public sector entities or reclassified assets, maintaining technical compliance,” Lian told Cointelegraph, adding:“This alternative approach allows El Salvador to retain its Bitcoin-friendly image while securing critical IMF funding to address unsustainable public debt and limited reserves.”Lian added that El Salvador’s strategy highlights the growing tension between financial innovation and traditional economic policies.“El Salvador’s experience offers valuable lessons for nations exploring crypto adoption, emphasizing the need for robust regulatory frameworks and state capacity to navigate international financial pressures,” he added.Magazine: Altcoin season to hit in Q2? Mantra’s plan to win trust: Hodler’s Digest, April 13 – 19

Investment firms with Bitcoin-focused treasuries are front-running global Bitcoin adoption, which may see the world’s first cryptocurrency soar to a $200 trillion market capitalization in the coming decade.Institutions and governments worldwide are starting to recognize the unique monetary properties of Bitcoin (BTC), according to Adam Back, co-founder and CEO of Blockstream and the inventor of Hashcash.“$MSTR and other treasury companies are an arbitrage of the dislocation between the bitcoin future and todays fiat world,” Back wrote in an April 26 X post.“A sustainable and scalable $100-$200 trillion trade front-running hyperbitcoinization. scalable enough for most big listed companies to move to btc treasury,” he added.Hyperbitcoinization refers to the theoretical future where Bitcoin soars to become the largest global currency, replacing fiat money due to its inflationary economics and growing distrust in the legacy financial system.Source: Adam BackRelated: Crypto sentiment recovers, but weekend liquidity risks remainBitcoin’s price outpacing fiat money inflation remains the main driver of global hyperbitcoinization, Back said, adding:“Some people think treasury strategy is a temporary glitch. i’m saying no it’s a logical and sustainable arbitrage. but not for ever, the driver is bitcoin price going up over 4 year periods faster than interest and inflation.”Back’s comments come nearly two months after US President Donald Trump signed an executive order to establish a national Bitcoin reserve from BTC forfeited in government criminal cases.Related: Serbia’s Prince Filip says Bitcoin is being stifled, expects huge rallyGlobal firms continue Bitcoin accumulationContinued Bitcoin investments from the likes of Strategy, the largest corporate Bitcoin holder, may inspire more global firms to follow suit.Strategy’s approach is proving to be lucrative, with the firm’s Bitcoin treasury generating over $5.1 billion worth of profit since the beginning of 2025, according to Strategy’s co-founder, Michael Saylor.Source: Michael SaylorJapanese investment firm Metaplanet, also known as “Asia’s MicroStrategy,”  adopted a similar strategy, since surpassing 5,000 BTC in total holdings on April 24, Cointelegraph reported.As Asia’s largest corporate Bitcoin holder, Metaplanet plans to acquire 21,000 BTC by 2026.US financial institutions may also have more confidence in adopting Bitcoin after the US Federal Reserve withdrew its 2022 guidance discouraging banks from engaging with cryptocurrency. “Banks are now free to begin supporting Bitcoin,” Saylor said in response to the guidance withdrawal.“Banks will now be supervised through normal processes, signaling a more open regulatory environment for digital asset integration,” Nexo dispatch analyst Iliya Kalchev told Cointelegraph.Magazine: Altcoin season to hit in Q2? Mantra’s plan to win trust: Hodler’s Digest, April 13 – 19