Mark Cuban, the billionaire investor and owner of the Dallas Mavericks who began to take an interest in bitcoin and crypto, called for regulation of the burgeoning decentralized finance (DeFi) space.
Cuban appealed to regulators after investing money in an algorithmic stablecoin that collapsed, saying Bloomberg there should be some regulation to define what a stablecoin is.
Register now for CryptoCodex–a new free daily newsletter that keeps you up to date and gives you a head start in the market. Arrives in your inbox at 7 a.m. ET every day of the week
Stablecoins, a type of cryptocurrency linked to an asset, usually the US dollar, have exploded in recent years, with the largest stablecoin, Tether, now posting a market cap of $ 62 billion. Meanwhile, DeFi, using cryptocurrency technology to recreate financial products like loans and insurance without the need for banking, has grown in popularity over the past year, helping the price of Ethereum, the blockchain on which most DeFi projects are built, to skyrocket.
DeFi stablecoins, which often attempt to maintain a foothold in fiat currencies by creating arbitrage opportunities and liquidity between coins, are very risky with a myriad of similar projects collapsing recently.
“There should be a regulation to define what a stable part is and what warranty is acceptable,” Cuban said.
Cuban did not disclose how much he lost on the project, recounting Bloomberg that “as a percentage of my crypto portfolio, it was small… but it was enough that I wasn’t happy with it.”
“I was hit like everyone else,” Cuban told another DeFi investor via Twitter, who suggested that Cuban had been “toughened” – when project liquidity dries up and investors are unable to. withdraw money.
Cuban – who revealed in March that 60% of its crypto holdings are in bitcoin, 30% in ethereum, and 10% in other coins – recently started experimenting with DeFi, writing this month in a blog post that “Banks should be afraid” of the largely unregulated and booming technology.
CryptoCodex-Help you understand the world of bitcoin in a nutshell
“It is important to note the central role of fiat-linked stablecoins in this emerging ecosystem,” said Paolo Ardoino, chief technology officer of Tether Limited stablecoins issuer and bitcoin exchange. Bitfinex cryptocurrency, in comments sent by email.
“Not all tokens are created equal. In some projects, there is a risk that everything will come to naught. We urge those who invest in the ecosystem to educate themselves on these new financial projects. Never invest what you don’t invest in the ecosystem. ‘re not ready to lose it all. “