IOSCO, the international securities body, has released its DeFi recommendations.
The International Organization of Securities Commissions (IOSCO) issued nine policy recommendations on 19 December.
The recommendations are the end result of a process that began with a report released early last year. They are far from fundamental – rule 7, for example, is “enforce applicable laws” – but their value lies in the detailed treatment each of them gives.
Therefore, the guidance with Rule 7 outlines the various ways in which a decentralized finance (DeFi) or other market participant may seek to avoid regulation. “Controllers should assess whether the appropriate forces, tools and resources are available,” it advises and lists possible tools.
IOSCO Finalizes DeFi Policy Recommendations @IOSCOPress #defi #defiregulation #defirisks #decentralizedfinance #regulation
— FX News Group (@FXNewsGroup1) December 19, 2023
“IOSCO is seeking to promote consistency in the way crypto-asset markets and securities markets are regulated,” the report added. […] On the principle of ‘same activity, same risk, same regulation/regulatory effect'.
Related: IOSCO calls for tighter controls on ‘financiers'
The DeFi Tips are a companion to the collection of crypto and digital asset tips that will be released in November. The organization has issued a memorandum showing how the two proposals can be implemented together, based on the degree of decentralization of the controlled entity. In Decision 2 (“Identification of Responsible Persons”), the report states:
“Some industry participants say that if something is decentralized, it is not controlled or impossible. […] However, no matter how ‘decentralised' the management structure or decision-making is, there is a responsible person(s) who control or adequately control the supply of products, the provision of services or the participation of activities.
Once the recommendations are finalized, IOSCO writes that it will shift its focus to monitoring, regulatory capacity building and technical assistance to members. IOSCO's members consist of more than 130 authorities that regulate 95% of the world's financial markets.
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