Is your blockchain service provider a fiduciary? As digital assets continue to mature and attract new investors, decentralized finance (DeFi) providers must begin to assume the responsibilities of a blockchain fiduciary. The hard lessons learned from the financial collapse of 2008 continue to resonate today. Investors are increasingly aware of the opaque fees, conflicts of interests, and other dubious practices that have plagued traditional financial markets. In order for blockchain to live up to its potential, and to truly have a transformational impact on financial markets, blockchain service providers must live up to the same fiduciary standards that we have come to expect in traditional industries.
Despite the growing maturity of blockchain-based assets, very little attention has been given to what blockchain service providers should be doing to ensure that they are placing their clients’ interests before their own. Investors and professionals, working with blockchain providers, may be unwittingly exposing themselves to potentially biased, and costly advice, from companies who put their own interests first.
Although there are many similarities between traditional financial professionals and those working in blockchain, the unique characteristics of this new class of assets, present investors with a different set of concerns. A regulatory landscape that is quickly evolving and a technological ecosystem that is changing every day, are only two of the key differences. Here are some other critical things to consider when choosing a blockchain provider: