The post DeFi to Enter ‘New Growth Phase’ Says BitMEX—Here’s Why appeared on BitcoinEthereumNews.com.

Decentralized finance markets are approaching a critical inflection point as pro-crypto policy frameworks unfold under the Trump administration, according to a comprehensive BitMEX research report examining industry trends for 2025. The report attempts to make a case for how regulatory clarity could gradually reduce legal headwinds for both established players and newcomers. “The current environment appears more receptive to innovation than in previous years,” notes the BitMEX report released late January. BitMEX’s outlook uncovers how shifting regulatory stances and increasing institutional interest could spark a “new growth phase” for DeFi—one that requires careful consideration to balance out innovation with compliance. Lending credibility Leading the institutional charge is lending protocol Aave, which maintains the largest Total Value Locked (TVL) among lending platforms, BitMEX said. This is supported by data from DefiLlama, which shows AAVE with just over $20 billion in TVL. The protocol’s code adoption by initiatives such as World Liberty Financial (WLF), a Trump-endorsed project, signals growing confidence in DeFi infrastructure from players both old and new, BitMEX suggests. This recognition from “influential entities” such as WLF shows Aave’s “reliability and adaptability,” BitMEX claimed. This integration points to a potential convergence of U.S. monetary interests with decentralized systems. “The new administration has given clear indicators for a positive future for DeFi and all kinds of crypto assets,” Charlie Hu, CEO and co-founder of Bitcoin L2 platform Bitlayer, told Decrypt. New token-governance policies and methods across DeFi protocols are also taking ground, with the “possibility of revenue sharing” opening opportunities for more traders and investors, Hu noted. However, the sector also faces new challenges. The IRS and U.S. Treasury’s upcoming regulations, effective 2027, will require DeFi platforms to implement KYC procedures and report user transactions similar to what traditional brokers do—a move that could fundamentally alter DeFi’s privacy-focused nature and decentralized…

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Filed under: News - @ February 6, 2025 10:24 pm