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IOSCO’s DeFi Policy Recommendations Clarify Regulatory Landscape

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IOSCO’s Guidance on DeFi Regulation

The International Organization of Securities Commissions (IOSCO), a global standard-setter for securities market regulation, has issued policy recommendations for the decentralized finance (DeFi) industry. Representing regulators from over 130 jurisdictions, IOSCO emphasizes that operating as a decentralized autonomous organization (DAO) does not exempt entities from regulatory responsibilities. This publication follows IOSCO’s recent recommendations for regulating crypto markets, addressing the unique challenges of overseeing a sector that traditionally lacks central supervision.

IOSCO suggests that many existing international policies and regulatory frameworks can be applied to DeFi activities. The organization advises that in cases where current rules are insufficient, they should be adapted to regulate the DeFi space effectively. The guidance covers identifying responsible parties, setting clear disclosure requirements, and enforcing laws. IOSCO defines responsible persons as those exerting control or significant influence over financial products, services, or activities within the DeFi arrangement, indicating that legal obligations apply regardless of organizational form or technology.

Moving Towards a Regulated DeFi Ecosystem

IOSCO’s recommendations mark a significant step towards integrating DeFi into the regulated financial ecosystem. By clarifying the applicability of existing laws and the need for potential adaptations, IOSCO is guiding its member regulators to supervise the DeFi sector effectively. This approach balances innovation with investor protection, ensuring that entities within the DeFi landscape operate under a clear and enforceable regulatory framework. The organization’s efforts underscore the growing recognition of DeFi’s potential and the importance of establishing a robust regulatory environment to support its sustainable development.

Jay Solano

Jay Solano

Jay is a crypto and NFT enthusiast dedicated to exploring the dynamic world of digital assets. As a crypto blog writer, he is sharing his knowledge of the latest trends, breakthroughs, and investment opportunities in the blockchain world.

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