Why Governments Must Begin Regulating Web3 Assets Early

Imagine waking up one day to find that your entire life savings, invested in a digital currency, has vanished because of a scam. That's exactly what happened to Sarah, a young investor who decided to put her money in a decentralized finance (DeFi) platform without knowing its legitimacy. Unfortunately, Sarah is not the only victim of such fraud, and these incidents are becoming more common in the decentralized world of Web3 assets.

The Need for Regulation

Experts argue that governments must begin regulating Web3 assets as soon as possible to protect investors like Sarah. According to a report by The National, the lack of regulation has created a breeding ground for scams and frauds in the Web3 ecosystem.

One of the primary reasons for the need for regulation is the absence of intermediaries in the decentralized world. Without trusted intermediaries, it becomes hard for investors to know whether a particular project is genuine or not. This lack of transparency makes it easier for scammers to deceive investors and run away with their money.

Real-Life Examples

There have been several instances where investors have fallen prey to Web3 scams. For instance, the infamous Poly Network hack in August 2021 resulted in the loss of over $600 million worth of cryptocurrency. Similarly, the DeFi platform, Iron Finance, suffered a massive crash in June 2021 due to mismanagement and resulted in a loss of over 90% of investors' funds.

These incidents highlight the vulnerability of Web3 assets, and without proper regulation, it is only a matter of time before more investors fall victim to such scams.

Main Companies in the Article

• Poly Network
• Iron Finance

Conclusion

The decentralized world of Web3 assets offers many opportunities, but it also comes with inherent risks. Governments must begin regulating Web3 assets early to protect investors and prevent scams and frauds. The absence of regulation has already resulted in significant losses for investors, and it is time for governments to take action.

Regulation, however, should not stifle innovation, and it should be done in a way that benefits both investors and the Web3 ecosystem. With proper regulation, the adoption of Web3 assets can be increased, and investors can have more confidence in the digital currency market.

In summary, Web3 assets require regulation to ensure transparency, accountability, and investor protection.