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25 Wash. U. Global Stud. L. Rev. 1 (2025-2026)

handle is hein.journals/wasglo25 and id is 1 raw text is: Building Castles in the Sky?: The Myth of Decentralized Finance and the Necessity of Legal Ordering Kuzi Charamba*, Yan Yue Joyce Shum** & Douglas W. Amer*** Abstract....................................................................................................... 3 Introduction................................................................................................. 4 R isk s in D eF i ......................................................................................... . 9 The D eFi H ypothesis ................................................................ . 10 Challenges to the Myth of DeFi................................................. 11 A . G overnance R isk ........................................................... . 12 B . Operational Fragilities................................................... . 12 I. Sm art Contract Risks ................................................ . 13 II. O racle R isks ............................................................ . 13 III. Blockchain Bridges ................................................ . 14 C. Liquidity and Maturity Mismatches................................ 14 D . L everage....................................................................... . 15 E. Risk of Complex Interconnectedness .............................. 16 Building a Conceptual Framework ............................................ 16 Regulatory Approaches: Existing and Proposed................................... 17 Regulation Based on the 'Equivalence' Principle...................... 20 The 'Whole-of-Government' Approach .................................... 22 Licensing and Registration Regimes: Similar Risk, Similar R egu lation .......................................................................... . 24 'Activity-Based' Versus 'Entity-Based' Regulatory Approaches . 25 * Founder & CEO, Tese.io; Post-doctoral Fellow in Digital Finance & Sustainable Development, HKU-Standard Chartered Foundation FinTech Academy, University of Hong Kong. ** PhD candidate, Department of Sociology and Research Associate, HKU-Standard Chartered Foundation FinTech Academy, University of Hong Kong. *** Kerry Holdings Professor in Law & RGC Senior Research Fellow in Digital Finance & Sustainable Development, University of Hong Kong; Associate Director - Research Programmes, Cambridge Centre for Alternative Finance, Judge Business School, Cambridge University; Sir Roy Goode Chair, Centre for Commercial Law Studies, Queen Mary University of London. The authors thank Ross Buckley, Jon Frost, Keith Bear and Daniel Liebau for comments on earlier drafts. All errors are those ofthe authors. The authors gratefully acknowledge the financial support of the Hong Kong Research Grants Council Theme-based Research Scheme Project T35-710/20-R), the Hong Kong Research Grants Council Senior Research Fellow Scheme (Project SRFS2021-7H01), and the HKU-Standard Chartered Foundation FinTech Academy.