DMCC’s report examines opportunities in the $261 billion DeFi sector

Dubai Multi Commodities Centre’s (DMCC) new crypto-focused Future of Trade report highlights growing opportunities for global trade’s $260.9 billion decentralized finance (DeFi) sector. Focused on DeFi, the report examines the key opportunities and challenges that the growing technology faces and how DeFi can bolster global trade.

The thought leadership report series of DMCC – the world’s flagship Free Zone and Government of Dubai Authority on commodities trade and enterprise – is titled ‘Perspectives on Decentralized Finance’ and examines three core themes: whether DeFi will substitute or supplement traditional finance systems; DeFi representing a tool that can benefit both developed and developing markets; and the crucial topic of establishing progressive regulatory frameworks that facilitate innovation. The report is available in Arabic, English, and Mandarin.

“Interest in decentralized finance is growing exponentially, with over $260.9 billion of total value currently locked into DeFi protocols versus $20 billion at the start of the year – this growth is for a good reason,” said Ahmed Bin Sulayem, DMCC’s Executive Chairman and Chief Executive Officer.

“As our Future of Trade report highlights, technology is revolutionizing financial systems worldwide, optimizing processes, and providing tangible benefits for global trade. This latest DMCC report closely analyses how we can collectively harness the opportunities presented by DeFi, and what steps we need to take from regulatory and infrastructure perspectives to maximize its impact.”

Feryal Ahmadi, DMCC’s Chief Operating Officer, added: “It is becoming increasingly clear that DeFi is set to change the current ways of finance and trade for the better. Whilst a few hurdles remain, achieving financial inclusion and democratized yet regulated DeFi protocols is certainly possible. As discussed in our Future of Trade report, The UAE is a prime example of a jurisdiction that fully supports crypto technologies, working with industry leaders to fully understand the technology and make informed policies that support innovation. This is why Dubai is increasingly becoming the destination of choice for many crypto firms looking to scale up their global operations.”

Firstly, the report considers whether DeFi is a viable substitute for traditional finance infrastructure or will supplement and become integrated into the current systems. With large institutional transactions (above $10 million) accounting for over 60% of DeFi transactions in Q2 2021, it is apparent that larger institutions are already adopting DeFi, demonstrating a shift in recognition of DeFi as a legitimate alternative to existing financial systems.

The report then examines DeFi’s ability to boost financial inclusion globally, covering the opportunities and risks of this technology for both developing and developed countries. For example, the World Bank states that 1.7 billion adults worldwide do not have access to banking services. DeFi addresses many of the barriers that developing countries face; however, internet infrastructure must be improved to facilitate widespread adoption in these countries.

The final area the report looks at is the critical space of regulation, discussing how regulators can develop and effectively implement appropriate regulations for DeFi without hampering innovation. Regulators worldwide continue to grapple with this issue, though some jurisdictions such as the UAE and Switzerland are leading the way.

Several industry experts contributed to the Future of Trade report, providing insights into these three core areas, including:

Crypto technologies such as blockchain and decentralized finance are a significant focus for DMCC’s current operations. Operated in partnership with CV Labs, the DMCC Crypto Centre was established earlier this year to provide a platform for crypto businesses to set up in Dubai and develop and drive the adoption of crypto worldwide.

 To date, over 130 crypto firms have joined the DMCC Crypto Centre, further cementing Dubai’s position as a prime destination for crypto businesses, according to TradeArabia News Service.