The International Organization of Securities Commissions (IOSCO), which sets global standards in the regulation of securities markets, has published policy recommendations for the regulation of decentralized finance (DeFi).
IOSCO Releases Policy Recommendations for Regulating DeFi
This guidance comes as IOSCO's members, who represent nearly 130 jurisdictions and oversee more than 95% of the world's securities markets, grapple with the challenges of overseeing the rapidly evolving DeFi space.
Operating on decentralized networks without a central governing authority, DeFi has posed regulatory challenges due to its unique structure.
In response, IOSCO has published comprehensive recommendations to help regulators address the complexities of the DeFi ecosystem.
IOSCO emphasizes that organizations involved in DeFi are not exempt from regulatory responsibilities, despite operating as decentralized autonomous organizations (DAOs).
“Persons and organizations that offer or provide financial products and services and engage in financial activities must be subject to applicable laws, regardless of the labels, forms of organization or technologies used,” IOSCO said in a statement.
The guidance outlines key areas that regulators should focus on when dealing with DeFi, including identifying responsible parties, establishing clear disclosure requirements, and enforcing laws.
IOSCO encourages regulators to adapt existing international policies, standards and regulatory frameworks where applicable and modify them where necessary.
*This is not investment advice.
