{"id":527110,"date":"2022-12-15T00:50:00","date_gmt":"2022-12-14T21:50:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/new-oecd-report-takes-lessons-from-crypto-winter-faults-financial-engineering\/"},"modified":"2022-12-15T00:50:00","modified_gmt":"2022-12-14T21:50:00","slug":"new-oecd-report-takes-lessons-from-crypto-winter-faults-financial-engineering","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/new-oecd-report-takes-lessons-from-crypto-winter-faults-financial-engineering\/","title":{"rendered":"# New OECD report takes lessons from crypto winter, faults \u2018financial engineering\u2019"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3558cf2936c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3558cf2936c\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/new-oecd-report-takes-lessons-from-crypto-winter-faults-financial-engineering\/#%E2%80%9D_New_OECD_report_takes_lessons_from_crypto_winter_faults_%E2%80%98financial_engineering_%E2%80%9C\" >&#8221; New OECD report takes lessons from crypto winter, faults \u2018financial engineering\u2019 &#8220;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_New_OECD_report_takes_lessons_from_crypto_winter_faults_%E2%80%98financial_engineering_%E2%80%9C\"><\/span>&#8221; New OECD report takes lessons from crypto winter, faults \u2018financial engineering\u2019 &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTIvODM3ZGRlOGQtMzZlNi00ZTU1LWE1ZjQtZmQzNmQ2ZjliY2Y2LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-30a6cf80>The Organisation for Economic Cooperation and Development (OECD) analyzed the crypto winter in a new policy paper titled \u201cLessons from the crypto winter: DeFi versus CeFi,\u201d released Dec. 14. The authors <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.oecd-ilibrary.org\/docserver\/199edf4f-en.pdf?expires=1671043663&amp;id=id&amp;accname=guest&amp;checksum=38AB81DFF1DA8E105A585A2125161807\">examined<\/a> the impact of the crypto winter on retail investors and the role of \u201cfinancial engineering\u201d in the industry\u2019s current problems and found a lot not to like.<\/p>\n<p>The paper from the OECD, an intergovernmental body with 38 member states dedicated to economic progress and world trade, concentrated on events in the first three quarters of 2022. It placed the blame for them squarely on a lack of safeguards due to \u201cnon-compliant provision of regulated financial activity\u201d and the fact that \u201csome of these activities may fall outside of the existing regulatory frameworks in some jurisdictions.\u201d<\/p>\n<p>The report noted that institutional market participants exited their positions sooner than retail investors, who may have even continued to invest as the market collapsed. Investors in TerraUSD (UST), for example, had \u201clittle understanding of the circular and reflexive character of the so-called stablecoin, which had no tangible value.\u201d Meanwhile, contagion spread through the industry due to its high interconnectivity. <\/p>\n<p>The crypto winter also \u201cexposed new forms of financial engineering\u201d that had a negative effect on the market. According to the report:<\/p>\n<blockquote><p>\u201cDevelopments such as liquid staking, creating derivatives backed by illiquid locked assets, create extreme liquidity transformation risk and maturity mismatches. Consecutive rounds of re-hypothecation of crypto-assets that are considered by platform clients to be lent and\/or \u2018locked\u2019 as collateral create risks related to high leverage and liquidity mismatches in crypto-asset markets.\u201d<\/p><\/blockquote>\n<p>Many of those practices derive from the \u201ccomposability\u201d of decentralized finance (DeFi), that is, the ability to combine smart contracts to create new products, and the practices continue unabated, the report said.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">1\/Excellent new research by the OECD on the role of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/hashtag\/CeFi?src=hash&amp;ref_src=twsrc%5Etfw\">#CeFi<\/a> and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/hashtag\/DeFi?src=hash&amp;ref_src=twsrc%5Etfw\">#DeFi<\/a> in the crypto turmoil. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/hashtag\/Crypto?src=hash&amp;ref_src=twsrc%5Etfw\">#Crypto<\/a> advocates may try to fault centralized players, but do not overlook the role of DeFi. Smart contract flaws + leveraged trading fueled volatility. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/t.co\/EVCRhp3y0a\">https:\/\/t.co\/EVCRhp3y0a<\/a> <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/t.co\/lWA2PeUclw\">pic.twitter.com\/lWA2PeUclw<\/a><\/p>\n<p>\u2014 Brian Laverdure, AAP (@brian_laverdure) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/brian_laverdure\/status\/1603033492560007169?ref_src=twsrc%5Etfw\">December 14, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The authors wade into the CeFi\/DeFi divide within crypto, noting that DeFi worked \u201cwithout issues\u201d in the first half of the year, although DeFi\u2019s automated liquidations could lead to greater market volatility. Both types of platforms may lack regulation or regulatory compliance, and CeFi and DeFi are highly interconnected in a concentrated ecosystem.  <\/p>\n<p><strong><em>Related: OECD releases framework to combat international tax evasion using digital assets<\/em><\/strong><\/p>\n<p>More faults were found in DeFi. The report documents an oracle failure during the Terra ecosystem collapse\u00a0that\u00a0created opportunities for abuse on some exchanges. Differences in information access led to DeFi and CeFi platforms behaving markedly differently during that crisis. The report noted:<\/p>\n<blockquote><p>\u201cCeFi and DeFi markets work better in bull markets.\u201d <\/p><\/blockquote>\n<p>The report stressed the need for educated retail investors. \u201cWhen <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ropriate disclosure about risks is not provided by market participants, policymakers could provide warnings to investors, and in particular to retail investors, about the increased risks of such activities,\u201d it said. It added that crypto market crises will have greater potential to spill over into traditional markets as the industry develops, and international coordination would be necessary \u201cto avoid regulatory arbitrage opportunities currently exploited by some non-compliant crypto-asset firms.\u201d<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/new-oecd-report-takes-lessons-from-crypto-winter-faults-financial-engineering\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; New OECD report takes lessons from crypto winter, faults \u2018financial engineering\u2019 &#8220; The Organisation for Economic Cooperation and Development (OECD) analyzed the crypto winter in a new policy paper titled \u201cLessons from the crypto winter: DeFi versus CeFi,\u201d released Dec. 14. The authors examined the impact of the crypto winter on retail investors and&#8230;<\/p>\n","protected":false},"author":1,"featured_media":527111,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/cdn-cgi\/image\/format=auto,onerror=redirect,quality=90,width=1200\/https:\/\/s3.cointelegraph.com\/uploads\/2022-12\/837dde8d-36e6-4e55-a5f4-fd36d6f9bcf6.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[75833,70934],"class_list":["post-527110","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-oecd","tag-regulation"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/527110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=527110"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/527110\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/527111"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=527110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=527110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=527110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}