S&P Global Report says Defi can’t replace Traditional financial
A report of S&P Global confirmed that there are many types of conditions, where the Traditional financial system may not face threat because of Decentralized Finance.
At present, there are many Centralized and Decentralized exchanges running in the crypto industry. According to data reports available, new crypto projects are entering the crypto industry with the DeFi concept, instead of choosing Centralized services. Many experts believe that such adoption and surge of Decentralized exchanges may end up a threat to the traditional financial system.
S&P Global is a financial information and analytics provider firm. Recently this firm published a report on Defi vs the traditional financial system. Through the report, the firm dismissed the assumptions of Defi’s threat to the traditional financial system.
According to the report of this firm, the Traditional Financial system needed to continue investment and also needed to bring innovation in its working system in the next year.
The report noted that this decentralized system will evolve parallelly with the traditional financial system, instead of replacing it.
“We believe it will continue evolving in 2022 toward complementing the current financial system rather than substituting financial services companies.”
However, the report also noted that there is a need to work on innovations and innovative ideas, otherwise, Money Investment will move away from these traditional systems.
S&P also confirmed that the current market is not in that situation where we can see that decentralized financial systems are impacting negatively on traditional. But these situations may change in the future if better steps will not be taken by these firms.
“Most DeFi applications (DApps) currently don’t compete with incumbents”
The report also explained how both of these two systems are working independently without overlapping. The firm noted that all the transactions in the Defi Ecosystem are limited to digital assets and native assets only.
“Devi’s potential is greater in higher-cost activities, which often provide higher margins to incumbents.”
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