IOSCO has expressed the need to establish regulations for the DeFi sector. The organization drew attention to the need to determine “responsible persons” in the management of DeFi protocols. IOSCO includes decentralized autonomous organizations (DAOs) and venture capital funds in this category.
Jurisdictions need to determine who is responsible for creating and managing decentralized protocols (DeFi). This was stated by the International Organization of Securities Commissions (IOSCO).
In its report, IOSCO pointed out the importance of identifying the “responsible persons” managing such projects. The lack of uniform standards complicates the regulation of the cryptocurrency industry, the organization believes.
“The regulator should seek to identify DeFi individuals and entities that may be subject to the current regulatory framework. In particular, these include persons who exercise control or sufficient influence over the proposed product, service or activity related to decentralized finance,” the report says.
IOSCO's position is that the rules that apply to traditional finance (TradFi) should also apply to the DeFi sector. According to the agency, those responsible for the operation of such projects should apply for regulation.
“Some industry participants believe that if their project is decentralized, it cannot be regulated. However, this is not the case,” IOSCO noted.
The report states that a responsible person may be someone who has voting or control rights. The agency includes decentralized autonomous organizations (DAO) in this category. In addition to DAOs, foundations are mentioned as potentially responsible entities.
IOSCO has provided relevant recommendations regarding the DeFI sector:
The DeFi policy recommendations are intended to complement report published by IOSCO last month.
“The two sets of recommendations on CDA and DeFi provide a consistent and robust framework for addressing the major risks posed by crypto asset markets. This will help create a fair and transparent playing field where responsible innovation can occur, while ensuring investor protection and market integrity,” said IOSCO Fintech Task Force Chairman Tuang Ly Lim.
Let us recall that IOSCO Chairman Ashley Alder said that the level of development of the crypto industry requires global supervision. In May 2023, the organization recognized cryptocurrencies as a full-fledged financial asset.
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