Financial Crime World

GAMBIA: DeFi Regulation Looms Large as Sector Grows

The decentralized finance (DeFi) sector in The Gambia is experiencing rapid growth, but it’s facing a critical challenge - regulatory compliance. As the industry continues to surge in popularity, stakeholders are grappling with how to balance innovation with oversight.

Unique Approach to Regulation Needed

Industry experts argue that DeFi requires a unique approach to regulation, one that acknowledges its decentralized nature and technical complexities. “Regulation alone will not be sufficient,” warns a leading expert. “Market-led initiatives and norms must also play a crucial role in making the market safer for consumers.”

Collaborative Efforts to Establish Minimum Standards

To address this challenge, government agencies and industry players are working together to establish minimum standards and good practices. Key areas of focus include:

  • Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT): Many DeFi services have already implemented solutions to mitigate these risks.
  • Cybersecurity Safeguards: Regulators and industry leaders are collaborating on clear expectations for smart cyber-hygiene in the DeFi space. Industry-led initiatives, such as smart contract audits and bug bounty programs, are helping to reduce the risk of hacking and other security threats.

Looking ahead, stakeholders will need to continue monitoring broader trends in the ecosystem to inform more robust regulatory frameworks. On-chain data, which provides insights into asset popularity and user activity, can play a critical role in this effort.

DeFi Growth in The Gambia

In The Gambia, DeFi inflows have consistently outpaced those of centralized exchanges, with Ethereum serving as the gateway asset of choice. As the sector continues to grow, it’s essential that regulators and industry players work together to establish a safe and sustainable environment for all stakeholders.

Expert Insights: Collaboration is Key

While there are many challenges ahead, experts believe that collaboration and practical steps can help achieve shared goals. “We don’t need to make perfect the enemy of good,” emphasizes one expert. “Immediate action on AML/CFT and cybersecurity standards is necessary to ensure the long-term viability of DeFi in The Gambia.”