What do you think of embedded supervision for DEFIs in the crypto market?

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Avatar for Jnavedan
1 year ago

In May this year, the Bank for International Settlements (BIS) updated a paper published in 2019 that elaborates on the idea of embedded supervision over decentralized finance (DEFI) in the crypto market.

Someone outside the game will ask, The BIS, what is this, only another instance of international banking?

Well! Understandably so, but you need to know that in the environments where it performs. It is the governing Bank of the World's Central Banks.

This discrete entity is headquartered in Basel -Switzerland and is owned by 63 central banks.

It has a board of directors with 18 representatives chaired by the head of the central bank of France.

It is under the direction of a Mexican banker, whom some blame for driving 20 million of his countrymen into poverty when he was the governor of the Central Bank of that country.

I wonder why Switzerland is one of the most important references for international finance?

Well! I think this will be a topic of interest for a future post linking it to the non-profit Foundations for the development of cryptocurrencies.

Let's leave this idea aside and move on to the topic of Embedded Supervision, which the BIS is considering promoting for its partners.

Understanding that the purpose is to facilitate coordination among the associated central banks.

In this sense, it should be clear that one of the urgent objectives is to support and articulate the creation of digital currencies for central banks.

In such a way, to counteract the threat of the newly structured economy based on new technological actors.

Yes, decentralized finance (DEFI), as a whole, constitutes the a priori threat to the absolute control they aspire to with CBDCs.

Absolute control is understood as being able to regulate at will how you and I should spend the money we believe to be ours.

That is why they took advantage of the recent crash in cryptos, especially the Terra Luna and Celsius cases, to relaunch the embedded Supervision (ES) thesis.

ES itself; is a regulatory framework that provides for compliance to be automatically monitored by reading the market log.

Perhaps, they intend to use this methodology as a template for implementing regulations at Central Banks.

Also, impose legal conditions to prevent Fintechs from unseating traditional banking by following the free market's rules.

If you have doubts about what I have just told you, meditate and read between the lines of the summary of the document below:

Now, if this little taste is not enough for you, I leave you below the link so you can take a critical look at it in search of the intentions I show you here.


Some have told me in the past that I overestimate the ability of financial and regulatory elites to influence markets.

Perhaps they are right. But there is no small enemy in either sense.

Still, others blame large investment corporations for the recent crash without exception in the crypto-verse.

I don't know if they are right. But in this world of madness, nothing can be taken for granted a priori.

Something one must ask oneself.

Will the Central Bank of my country be affiliated with this supranational entity?

Well! I did not see my country's Central Bank on the list of BIS member countries. But to my surprise! I see in its policies many of these ideas being implemented.

Sure, there will be cooperation agreements that we do not know yet. This would explain the alignment of policies and actions.

If you noticed in the Abstract, DEFIs, and cryptocurrencies (in general) are considered a shadow financial system that needs to be regulated by the instituted authorities to be more transparent and reliable.

I wonder, which financial system is more transparent?

The BIS proposal on Integrated Supervision for DEFI under a naive reading looks good. Too bad that the recent performance of central bank policy actions has not been successful.

Of course, this article is just my interpretation, and you don't have to agree with me.

Even the financial shelf water is still churning, and seeing the bottom is difficult.

But I can tell you that the crypto-verse with its products like DEFI is here to stay.

On the other hand, the attempts to control it: whether by instruments such as BIS Embedded Supervision, will appear as this financial revolution takes hold.

Source: Image by Pabitra Kaity on Pixabay 

An original article by @Jnavedan

Cover image by Taxiarchos228 - Own work, FAL.

I end by thanking all my colleagues in the community, who add value every day here. As well as all my sponsors for believing in the content I share with you.

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Avatar for Jnavedan
1 year ago


Sin duda, harán todo lo necesario para controlar aquello que aún no han podido y solo el tiempo nos dirá quien será más poderoso para lograrlo o evitarlo

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1 year ago

Eso es correcto mi querido amigo. Ellos nos venderán las CBDCs como una mejor opción que las criptomonedas.

Cómo bien dices, el tiempo revelará quien puja más y mejor: Control absoluto contra libre mercado.

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1 year ago