IOSCO Issues Policy Recommendations for Decentralized Finance (DeFi)
The International Organization of Securities Commissions (IOSCO) has released policy recommendations aimed at regulating the decentralized finance (DeFi) sector. These recommendations seek to establish consistent regulatory oversight within and across jurisdictions.
The report emphasizes the need for governments to identify responsible individuals within the DeFi space and regulate them similarly to traditional finance. It also highlights the importance of enforcing applicable laws and addressing potential evasion by DeFi participants. IOSCO underscores the necessity of addressing market integrity and investor protection concerns arising from technological developments in DeFi.
The recommendations align with IOSCO’s Crypto-Asset Roadmap and complement those issued for Crypto and Digital Assets (CDA) markets. They emphasize the applicability of existing international policies, standards, and regulatory frameworks to DeFi, suggesting modifications where necessary.
Global Cooperation for Consistent Regulation
IOSCO urges enhanced cooperation among regulators to address cross-border challenges, enforce regulations, and supervise DeFi participants engaging in global crypto-asset activities. The organization aims to promote consistency in the regulation and oversight of crypto-asset markets within individual jurisdictions.
While the recommendations are not directly aimed at market participants, IOSCO encourages all crypto-asset market participants to consider the outlined expectations, especially in regulated and cross-border activities.
IOSCO will now focus on implementation, capacity building, and providing technical assistance to regulators adopting the suggested frameworks.
Hot Take: IOSCO Takes a Step Towards Regulating DeFi
The International Organization of Securities Commissions (IOSCO) has issued policy recommendations for regulating decentralized finance (DeFi), emphasizing consistent oversight and protection for investors. The recommendations call for identifying responsible individuals within DeFi and enforcing applicable laws. They also stress the importance of addressing market integrity and investor protection concerns arising from technological developments in DeFi.
IOSCO’s recommendations align with its Crypto-Asset Roadmap and complement those issued for Crypto and Digital Assets (CDA) markets. The organization highlights the applicability of existing international policies and regulatory frameworks to DeFi, suggesting necessary modifications.
IOSCO urges global cooperation among regulators to address cross-border challenges and supervise DeFi participants engaging in global crypto-asset activities. While the recommendations are not directly aimed at market participants, IOSCO encourages thorough consideration of the expectations outlined in the recommendations.
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