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Crypto’s Unregulated DeFi Boom Raises Shadow Banking Comparisons

  • American’s Allen says DeFi endangers broader financial system
  • Biden executive order emphasized support for crypto innovation

Many of the negative hallmarks of shadow banking -- such as the excessive leverage and opacity that precipitated the 2008 global financial crisis -- have already seeped into the world of decentralized finance.

That’s the warning of Hilary Allen, a professor at American University’s Washington College of Law, in a recently published paper titled “DeFi: Shadow Banking 2.0?”