IOSCO Publishes Policy Recommendations for Decentralized Finance (DeFi)

cryptonews.com:

The International Organization of Securities Commissions (IOSCO), which sets standards for securities market regulation globally, has issued policy recommendations for the supervision of decentralized finance (DeFi).

On December 19, IOSCO unveiled nine policy recommendations aimed at regulating the decentralized finance (DeFi) sector. This guidance comes as regulators worldwide grapple with the challenges of regulating DeFi, an industry that lacks a centralized body subject to traditional supervision.

These recommendations, part of a comprehensive approach initiated last year, seek to foster greater consistency in regulatory oversight both within and across jurisdictions. Notably, IOSCO had previously published recommendations for regulating crypto markets in September.

In its latest report, IOSCO highlights the need for governments to identify those responsible for innovative financial applications within the DeFi space and regulate them similarly to traditional finance. While some of the recommendations may appear standard, their significance lies in the detailed treatment provided for each.

For instance, Recommendation 7 emphasizes the enforcement of applicable laws and guides on assessing regulators’ powers, tools, and resources to address potential evasion by DeFi or other market participants.

Recognizing the importance of responsible innovation benefiting investors and markets, IOSCO underscores the necessity of addressing market integrity and investor protection concerns arising from technological developments in DeFi.

These recommendations, aligned with IOSCO’s Crypto-Asset Roadmap, complement those issued for Crypto and Digital Assets (CDA) markets in November 2023. Following a lifecycle approach, the principles-based