Florida’s Office of Financial Regulation Issues Warning About DeFi

Florida’s Office of Financial Regulation (OFR) has issued a warning about decentralized finance (DeFi) based companies that offer lending, banking and investment services.

The OFR is cautioning the public that before using any DeFi-based service, it is important to do the necessary due diligence and understand what DeFi is in order to avoid becoming the victim of a scam.The state regulatory body warns the DeFi investment market is still new, highly volatile and driven mostly by psychological factors rather than investment fundamentals.DeFi is one of the fastest-growing sectors of the crypto industry, with $92 billion worth of assets currently locked in peer-to-peer powered protocols – up 196% over the last year, as reported by CoinDesk.Scams, rug pulls, exploits and fatal code errors are among the biggest risks associated with using DeFi platforms.The OFR defines DeFi as financial services provided by an algorithm on a blockchain, without the involvement of a traditional financial services company.“Before getting involved with a company or product in the DeFi market, take reasonable steps to understand the risks of this emerging blockchain-based technology and market,” OFR Commissioner Russell Weigel said in a statement.

Read more: How to Stay Safe in DeFi: Red Flags and Risks You Need to Know