The International Organization of Securities Commissions (IOSCO), an umbrella international policy forum for global securities regulators, released its Final Report, which includes policy recommendations for decentralized finance (DeFi), after a public consultation earlier this year to establish a global approach to tackling the risks of decentralized finance (DeFi).。

The nine policy recommendations aim to address market integrity and investor protection issues arising from decentralized finance (DeFi) by supporting member jurisdictions to enhance consistency in regulatory frameworks and oversight.。The recommendations cover six key areas: (1) understanding DeFi arrangements and structures, (2) achieving common standards for regulatory outcomes, (3) identifying and managing key risks, (4) clear, accurate and comprehensive disclosure, (5) enforcing applicable laws, and (6) cross-border cooperation。

The DeFi Policy Advice is in addition to the Cryptocurrency and Digital Assets (CDA) Market Policy Advice issued in November 2023.。The two sets of IOSCO recommendations are based on the IOSCO's 2022 / 2023 Crypto Asset Roadmap, and interoperability between the two sets of recommendations is detailed in the Overarching Notes released with the DeFi Final Report.。

With the implementation of these recommendations, IOSCO is now turning its attention to the implementation oversight, capacity-building and technical assistance needs of its members。IOSCO said it recognizes that jurisdictions are at different stages in addressing the risks posed by crypto-asset markets and financial diversification.。Some countries already have existing regimes in place, while others have to develop new customized frameworks。

Jean-Paul Servais, chairman of IOSCO, said:

"I am pleased that IOSCO has achieved the policy objectives set out in our crypto asset roadmap in less than 18 months.。Risks in the crypto-asset market are real and we are addressing them in a coordinated manner, seeking to implement these IOSCO recommendations consistently among our members to maximize the protection of global investors.。"

Tuang Lee Lim, chairman of the board-level fintech working group of the International Organization of Securities Commissions, which was set up to develop policy measures, said:

"The two sets of policy recommendations on CDA and DeFi provide a coherent and robust policy framework to address the core risks posed by the crypto asset market."。This will help promote a level and transparent playing field for responsible innovation, while ensuring investor protection and market integrity outcomes。"

The IOSCO is the primary international policy forum for securities regulators and is recognized as a global standard setter for securities regulation.。The organization's members oversee more than 95% of the world's securities markets in about 130 jurisdictions and are expanding.。

The full text of IOSCO's final report and policy recommendations on decentralized finance (DeFi) can be found here (pdf)。