{"id":540086,"date":"2023-01-17T18:00:00","date_gmt":"2023-01-17T15:00:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/"},"modified":"2023-01-17T18:00:00","modified_gmt":"2023-01-17T15:00:00","slug":"10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/","title":{"rendered":"# 10 practices crypto can borrow from TradFi to better protect customers"},"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-6a307220ac224\" 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-6a307220ac224\" 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\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#%E2%80%9D_10_practices_crypto_can_borrow_from_TradFi_to_better_protect_customers_%E2%80%9C\" >&#8221; 10 practices crypto can borrow from TradFi to better protect customers &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Establishing_an_insurance_system\" >Establishing an insurance system<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Educating_consumers_about_essential_facts\" >Educating consumers about essential facts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Implementing_best_practices_from_day_one\" >Implementing best practices from day one<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Creating_and_adhering_to_regulatory_guidelines\" >Creating and adhering to regulatory guidelines<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Setting_up_safeguards_to_reassure_the_public\" >Setting up safeguards to reassure the public<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Ensuring_customer_assets_are_not_inappropriately_commingled\" >Ensuring customer assets are not inappropriately commingled\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Establishing_safety_nets_to_protect_against_bad_actors\" >Establishing safety nets to protect against bad actors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Expanding_access_and_focusing_on_the_user_experience\" >Expanding access and focusing on the user experience\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Imposing_consequences_for_fraud\" >Imposing consequences for fraud\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/buradabiliyorum.com\/en\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\/#Not_resisting_financial_controls\" >Not resisting financial controls<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_10_practices_crypto_can_borrow_from_TradFi_to_better_protect_customers_%E2%80%9C\"><\/span>&#8221; 10 practices crypto can borrow from TradFi to better protect customers &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjMtMDEvMTJkNWM1ZWUtMzQ2Mi00YWIzLTg2N2YtMmU3MmM5Y2Q5ZDYwLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a4050f8>Crypto pioneers and decentralized finance companies often talk about their commitment to opening up financial opportunities to underserved populations, but that\u2019s only half the battle in achieving success for this fledgling industry. Global consumers must be confident that the funds they invest with crypto companies are safe, secure and accessible for withdrawal when desired.<\/p>\n<p>While traditional finance companies may not offer all the new and unique opportunities and potential of DeFi, what they do enjoy is a long history and established methods for protecting consumers\u2019 investments \u2014 and maintaining their trust. Below, 10 members of Cointelegraph Innovation Circle discuss some helpful things the crypto industry can learn from the TradFi industry, including practices DeFi companies should consider adopting and adapting for their own customer base.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Establishing_an_insurance_system\"><\/span>Establishing an insurance system<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>DeFi companies don\u2019t have the FDIC insurance that TradFi companies enjoy, but that shouldn\u2019t stop us from creating our own. Functioning insurance systems that use smart contracts to automatically issue payments to affected parties is the best way to ensure safety and security. TradFi enjoys a bureaucratic system to make this h<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>en; we can do the same, and far more quickly, using decentralized systems. \u2013 Budd White,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/tacen.com\/\"> Tacen<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Educating_consumers_about_essential_facts\"><\/span>Educating consumers about essential facts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Before investing in cryptocurrency, it is very important that the consumer 1) is okay with handling their own money in a decentralized world, as opposed to the centralized world of financial institutions; 2) has researched reputable wallets and exchanges before sending crypto or money to them; and most of all 3) knows this truth: \u201cnot your keys, not your coin.\u201d It\u2019s essential to educate consumers about these facts in the decentralized world of finance. \u2013 Chris Groshong,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.coinstructive.com\/\"> CoinStructive, Inc.<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Implementing_best_practices_from_day_one\"><\/span>Implementing best practices from day one<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>An ounce of prevention is worth a pound of cure. A key lesson from traditional finance is that by the time something unexpected happens, it\u2019s usually far too late to start implementing best practices. With that in mind, Web3 businesses should prioritize regulatory compliance and protecting user funds from day one. \u2013 Wolfgang R\u00fcckerl, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/entity.global\/\">ENT Technologies AG<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Creating_and_adhering_to_regulatory_guidelines\"><\/span>Creating and adhering to regulatory guidelines<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The crypto industry should look to traditional financial institutions to understand how they safeguard funds through regulatory oversight and compliance. Such traditional institutions adhere to strict rules, guidelines and regulations. The cryptocurrency industry could look to implement similar guidelines while keeping the spirit of DeFi. \u2013 Theo Sastre-Garau,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/nftevening.com\/\"> NFTevening<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Setting_up_safeguards_to_reassure_the_public\"><\/span>Setting up safeguards to reassure the public<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Proper insurance is something that would be very useful in centralized finance (to guard against theft and misuse) and even in DeFi (to guard against hacks and exploits). If we could solve insurance for crypto and fiat client funds in an effective way, that would put many people and institutions at ease. \u2013 Brian D. Evans,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/reblock.ventures\/\"> ReBlock Ventures<\/a><\/p>\n<p class=\"has-black-color has-text-color has-background\" style=\"background-color: #fabf2c;padding: 20px 30px\">Join the community where you can transform the future. Cointelegraph Innovation Circle brings blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> leaders together to connect, collaborate and publish.\u00a0<strong><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/hubs.ly\/Q0152XyT0\">Apply today<\/a><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Ensuring_customer_assets_are_not_inappropriately_commingled\"><\/span>Ensuring customer assets are not inappropriately commingled\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The safety of customer funds is both a cybersecurity and an accounting issue. Having proper mechanisms to ensure that no customer\u2019s assets are commingled in a manner not consistent with a custodial mandate is key. Also, it\u2019s paramount to understand that only banks are designed to run on fractional reserves. Crypto managers must learn the differences between the nature of their firms and TradFi organizations. \u2013 Carlos Gomez,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/belobabafund.com\/\"> Belobaba Crypto Fund<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Establishing_safety_nets_to_protect_against_bad_actors\"><\/span>Establishing safety nets to protect against bad actors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One of the major differences between TradFi and DeFi is the lack of safety nets in the latter. Where banks and brokerage firms enjoy, respectively, FDIC and SIPC services, crypto companies and users remain vulnerable to bad actors. While crypto custody is unique, for the industry to gain equal footing alongside legacy systems, such protections must be considered for all participants. \u2013 Oleksandr Lutskevych,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/cex.io\/\"> CEX.IO<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Expanding_access_and_focusing_on_the_user_experience\"><\/span>Expanding access and focusing on the user experience\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In TradFi, users\u2019 funds are <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly secure and easy for them to access; crypto has struggled to find this balance. The safest way for users to engage with crypto is through DeFi solutions, as opposed to CeFi, but there are high barriers to entry. To ensure the security of client funds, we need to make DeFi more accessible and improve user experience and interface. \u2013 Anthony Georgiades,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/pastel.network\/\"> Pastel Network<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Imposing_consequences_for_fraud\"><\/span>Imposing consequences for fraud\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Don\u2019t let bad actors get away with it. There are already many laws on the books that speak to the commingling of funds, risk disclosures and various forms of financial fraud. Enforcing these laws will at least reduce the crimes that happen in the light of day, such as those that happened with FTX and SBF. TradFi has shown us that consequences are required for moderation. \u2013 Arie Trouw,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/xyo.network\/\"> XYO<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Not_resisting_financial_controls\"><\/span>Not resisting financial controls<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Traditional financial controls are there for a reason, and they emerged because of historical events. The \u201ccollege dorm room\u201d and \u201canti-establishment\u201d mentalities about money have to go. \u2013 Zain Jaffer,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.zain-ventures.com\/\"> Zain Ventures<\/a><\/p>\n<hr class=\"wp-block-separator\">\n<p><em>This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.<\/em><\/p>\n<p><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/hubs.ly\/Q0152XyT0\"><em><strong><u>Learn more about Cointelegraph Innovation Circle and see if you qualify to join.<\/u><\/strong><\/em><\/a><\/p>\n<\/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\/innovation-circle\/10-practices-crypto-can-borrow-from-tradfi-to-better-protect-customers\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; 10 practices crypto can borrow from TradFi to better protect customers &#8220; Crypto pioneers and decentralized finance companies often talk about their commitment to opening up financial opportunities to underserved populations, but that\u2019s only half the battle in achieving success for this fledgling industry. Global consumers must be confident that the funds they invest&#8230;<\/p>\n","protected":false},"author":1,"featured_media":540087,"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\/2023-01\/12d5c5ee-3462-4ab3-867f-2e72c9cd9d60.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-540086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/540086","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=540086"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/540086\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/540087"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=540086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=540086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=540086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}