I would be shaking my head if we, the commoners of the cryptospace, would support a move for stricter global regulations in crypto. This will only make the use of cryptocoins, Defi and other protocols harder for us commoners, however, it will certainly not make it more difficult for those higher level criminals to create and fund their scams in crypto.
Cryptocurrency regulation is currently a focal point for regulators and lawmakers all across the world. Regulators have been tightening the noose around the crypto industry to safeguard consumers from bad actors.
The colossal fall of the FTX crypto exchange has alarmed regulators even more, and lawmakers are trying to bring effective and efficient crypto regulation into place.
The president of BaFin has censured the current synopsis of the regime that governs the crypto sectors as not strict enough. This points toward the condition where the industry will not be able to keep bad actors in control.
Read in full https://bitcoinist.com/germany-calls-global-regulation-of-crypto-industry/
I do not think that Germany fully understands the concept of decentralized finance. They are still thinking of crypto in terms of digital money, like Paypal. They are completely leaving out the issue of the unregulatable nature of smart contract swapping of crypto. Especially when it comes to DeFi.
How exactly do they think they can demand KYC from every single person with a self-custody wallet? How are they even going to find the people the wallets belong to? Do they just hope that everyone with a wallet makes themselves known? Or are they going to demand unreasonable and impossible KYC demands for service/goods providers who accept Bitcoin?
All these demands from unknowing politicians are just empty threats, because they cannot actually do anything. I am certain that they only demand more to be done as a way to make themselves look good (as in PR stunts) by pretending like they have found a solution of somehow centralizing a decentralized, anonymous money. Lets not forget, they have not even been able to control Bitcoin as they would a regular security. And Bitcoin has been unrestrained for over a decade now.
What chance do they think they have with DeFi? Not even mentioning privacy coins like Monero. At some point they will realize that they cannot attack the end points like crypto exchanges because there are always other ways to buy and sell crypto. Its over. The governments can only kick and scream now. We have won.
The fact that the oldest crypto, Bitcoin, has not been put on a leash by the government is the greatest proof of this.
They can only declare that those Defi tokens issued will not pass the howie test and charge them to be illegal securities. It has not discouraged the developers and project creators, however hehehe.
Also, you mention Monero and privacy. There will be more development on privacy 2nd layers on Ethereum that Defi developers can test and later use. Presently there is Loopring, ZKsync, ZKspace and Aztec. I reckon there are a few more others being developed.