Cryptocurrency

UK Financial Policy Committee’s Carolyn Wilkins calls for improved governance, trust in crypto industry

Zegex

Carolyn Wilkins, an outside member of the UK’s Monetary Policy Committee, argues that the current decentralized financial governance structure is more centralized than it claims.

Carolyn Wilkins said in her speech on Oct. 19 that cryptocurrency protocols are revisiting largely “centralized” decision-making processes, and are working to improve transparency in order to maintain investor confidence. He said best practices should be adopted.

To make an argument against decentralization of cryptocurrencies, Wilkins pointed out that Ethereum is highly centralized. In the events that led to the merge, Ethereum’s core development team had unilateral decision-making authority to determine the timeline and functionality of the PoS migration.

For Bitcoin, it is estimated that around 50 miners control half of the mining capacity. This makes it easier for unscrupulous individuals to cooperate in front-running or manipulate the market for profit.

In the case of DeFi protocols such as MakerDAO and Polkadot, selection committees are assigned emergency powers to make decisions unilaterally in times of uncertainty.

Establishing Confidence in Crypto Adoption

Wilkins argues that as the cryptocurrency community works to improve its governance, there is a need to improve trust and transparency in the system.

First and foremost, the industry should develop codes of conduct and best practices related to disclosure of financial statements, sources of information and use of funds. For greater transparency, the protocol can periodically audit the code and disclose how decisions are made and who controls the “commit keys”.

Wilkins added that regulatory clarity is a key issue that the industry must address. She called on governments to provide the legal and regulatory infrastructure necessary to ensure consumer protection similar to traditional finance.

Wilkins called on the cryptocurrency industry to work more aggressively to keep up with traditional institutions that have a reliable infrastructure and are now adopting blockchain technology to improve their services. .

Wilkins said:

“It is in the private sector’s interest to act aggressively. Major investors need to ‘stand up and stand up’ to demand change. It is important that the industry adopts best practices and codes of conduct to reinforce responsible behavior and culture. “

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