What Are the Primary Obstacles to Establishing Trusted, Universally Accepted Issuers of Verifiable Credentials for DeFi?

The main obstacles are centralization risk and lack of universal standards. Users must trust the issuer not to abuse their data, and DeFi protocols must trust the issuer's verification process.

Establishing a decentralized network of trusted issuers is a coordination problem, as it requires agreement on standards for identity verification, data security, and interoperability. Furthermore, overcoming regulatory fragmentation is a major hurdle, as an issuer accepted in one jurisdiction may not be recognized in another, limiting the credential's utility and creating a walled-garden effect within a supposedly open ecosystem.