Global standard-setting body for securities markets releases recommendations on DeFi regulation | CoinDesk JAPAN

The International Organization of Securities Commissions (IOSCO), the world’s standard-setting body for securities market regulation, has announced its handling of decentralized finance (DeFi) as member institutions representing approximately 130 countries and regions consider how to supervise the field. We have presented guidelines regarding this.

IOSCO, which regulates more than 95% of the world’s securities markets, published recommendations on decentralized finance (DeFi) on December 19, just one month after issuing recommendations on regulating the crypto asset (virtual currency) market.

Regulators have struggled to tackle DeFi, which theoretically lacks a central body that could oversee it. However, in a September report, IOSCO called on governments to find ownership of innovative financial applications and regulate them like traditional finance.

“Given the similarities in the economic functions and activities of DeFi and traditional financial markets, many existing international policies, standards, and jurisdictional regulatory frameworks are limited to DeFi activities and the mechanisms governing them. ”, IOSCO said.

IOSCO says that where existing rules do not apply, they should be amended accordingly. Guidance on DeFI regulation explains how to identify responsible parties, set clear disclosure requirements, and enforce the law.

Responsible parties include: “The financial products provided, financial services provided, or financial activities engaged in by the DeFi arrangement (or financial products, services, and activities that operate similarly to or are substituted by investors)” “A person who exercises control or sufficient influence over products, services, and activities”.

Therefore, operating as a decentralized autonomous organization (DAO) rather than a legal entity does not mean that “these individuals or entities abdicate their regulatory responsibilities,” IOSCO said.

“Regardless of the presentation, organizational form, or technology used, individuals and entities offering financial products and services and engaging in financial activities should comply with applicable laws.”

｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: Shutterstock
｜Original text: Global Securities Regulator IOSCO Issues DeFi Policy Recommendations