DAOs Need Regulatory Framework for Future of Finance, says ECB
The European Central Bank (ECB) has emphasized the importance of a comprehensive regulatory framework for decentralized autonomous organizations (DAOs) in the financial sector. In an Occasional Paper titled “The future of DAOs in finance – in need of legal status,” the ECB’s Ellen Naudts highlighted how technology has outpaced regulation in relation to DAOs, posing risks to the ecosystem’s safety and sustainable growth.
The current registration framework, designed for a traditional pen-and-paper era, fails to address the liabilities that DAOs present to investors. The paper concludes that until DAOs are adequately regulated globally to ensure financial stability, smooth operations of payments and securities systems, and consumer protection, their role in the future financial sector will remain limited.
Digital Euro Could Put Europe Ahead
ECB executive board member Fabio Panetta has voiced his support for the European Commission’s legislative proposals for the digital euro. Panetta believes that a digital euro would enable Europeans to have access to a public payment option, whether in cash or digital form. He emphasizes the need for legislators to ensure that key characteristics of cash, particularly privacy, are replicated in the digital sphere.
Hot Take: Regulatory Framework Crucial for DAOs’ Future
The European Central Bank stresses that decentralized autonomous organizations (DAOs) require a comprehensive regulatory framework to thrive in the financial sector. The current registration framework is inadequate in addressing the risks posed by DAOs to investors and financial stability. Without adequate global regulation, DAOs’ role in the future financial sector will be limited. Additionally, ECB executive board member Fabio Panetta supports legislative proposals for a digital euro, which would provide Europeans with a public payment option. Privacy must be ensured in the digital realm to replicate the characteristics of cash.
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