Know DeFi counterparties for institutional engagement, says BlackRock exec.

Joseph Chalom, head of strategic partnerships at BlackRock, a giant asset management company, emphasized the importance of knowing who they are trading with when using decentralized finance (DeFi) protocols.

During the State of Crypto Summit organized by Coinbase and the Financial Times on Thursday in New York, Chalom told the audience that not knowing who they are trading with could result in going to jail.

According to blockchain, Chalom also commented on the use of automated market making (AMM) in DeFi, calling it a fig leaf that is used instead of traditional central order books.

Chalom stressed the need for a clear understanding of who is in a liquidity pool, and explained that strict regulations are a primary reason why traditional financial institutions are hesitant to participate in the crypto and DeFi sector.

However, the principle of user privacy in DeFi remains a major obstacle to wider institutional acceptance.

BlackRock, which manages nearly $8.6 trillion, is the world’s largest asset manager. The company sponsors a large number of exchange-traded funds (ETFs) and has recently applied to list its own spot Bitcoin ETF, raising hopes that it will be approved by the Securities and Exchange Commission (SEC). As such a large and influential company, DeFi developers may want to pay attention to BlackRock’s views if they hope to gain wider institutional acceptance.