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Decentralized finance- A case for Irreconcilable duality

Decentralized finance- A case for Irreconcilable duality

Many people have conflated the terms digital assets and decentralized finance (DeFi) as one, yet the two are fundamentally distinct. The former can be called the digital equivalent of property, while the latter is the financial system through which that property is transacted. Recent judgments of different common law jurisdictions have identified digital assets falling within the domain of property, providing an ex-post blanket protection to the hard earned money of the people.[1] This further led to other jurisdictions recognizing it through well-orchestrated laws including Pakistan, which has now recognized and regulated virtual assets through the “Virtual Assets Act, 2026”.[2] With all the development happening in these domains, the real challenge lies not in recognizing digital assets as property but in regularizing the very system of DeFi. It is widely recognized that the DeFi system was created in response to traditional centralized finance, because it offers decentralization and democratized access to investment.[3]  However, the recent developments in terms of ex-ante laws are raising questions over the very purpose of establishing this altogether new system if we are going to apply the same set of rules to it.

Looking back at the history of banking, one realizes that P2P lending existed long before modern financial institutional banking.........

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