Summary
The International Organization of Securities Commissions (IOSCO) has published its policy recommendations for decentralized finance (DeFi), advising jurisdictions to identify the individuals behind “leaderless” protocols. The report highlights the challenges of regulating the anti-centralized nature of DeFi and suggests that regulators should identify those exercising control or influence over DeFi arrangements. The recommendations also call for the creation of laws to prevent conflicts of interest and market manipulation. IOSCO aims to coordinate how nations respond to new technologies and reduce regulatory arbitrage through consistent regulation. The organization recommends the sharing of information across borders to combat criminal activity and risks.
Key Points
1. The International Organization of Securities Commissions (IOSCO) has published decentralized finance (DeFi) policy recommendations, urging jurisdictions to identify the individuals and entities behind leaderless protocols.
2. IOSCO highlights the challenge of regulating the anti-centralized nature of DeFi and emphasizes the importance of identifying “responsible persons” who exercise control or influence over financial products, services, and activities offered by DeFi arrangements.
3. IOSCO also suggests the creation of laws to prevent conflicts of interest and market manipulation in DeFi, as many arrangements and activities present conflicts of interest, and participants may act in roles that create such conflicts.