Deficiencies in transparency and the potential for fractional reserve banking have further marred the reputation of the crypto ecosystem. As a result, some participants are left to navigate perilous waters, turning to non-compliant or opaque services while struggling to establish partnerships in traditional finance. DeFi stablecoin projects claim to provide solutions, but often fall short in transparency and suffer from mismanagement, mimicking the flaws of established financial institutions.
Additionally, market concentration and centralization pose significant threats to the core principles of the cryptocurrency domain. The disproportionate power held by a few crypto giants hinders decentralization efforts and makes them vulnerable to regulatory disruptions.