Decentralised Finance (DeFi): IOSCO publishes its consultation report
Executive Summary
The AMF publication announces IOSCO's consultation report on Decentralised Finance (DeFi), highlighting ongoing global efforts to regulate DeFi activities under IOSCO's 2023 policy recommendations. This matters for compliance professionals as it signals intensifying scrutiny on DeFi platforms for investor protection, market integrity, and financial stability risks, potentially leading to harmonized rules that bridge traditional finance and crypto assets. Firms involved in DeFi must monitor this to align with emerging "same risk, same rule" standards across jurisdictions. #
What Changed
No immediate binding regulatory changes are introduced, as this is a consultation report tied to IOSCO's 2023 DeFi Recommendations and a 2025 Thematic Review assessing implementation progress. Key focuses include enhanced regulatory cooperation (Recommendation 11), addressing gaps in enforcement for Crypto Asset Service Providers (CASPs), and applying CDA Policy Recommendations to DeFi for risks like financial stability, investor protection, and market integrity. Progress is noted in legal frameworks, but challenges persist in cross-border cooperation and enforcement beyond CASPs.
Suggested Considerations
- Review and comment: Submit feedback on IOSCO consultations by early February 2026 to influence final guidance on DeFi risks.
- Gap analysis: Assess current operations against IOSCO's 10 Assessed Recommendations (e.g., market integrity, investor protection, cross-border cooperation) and FSB frameworks, noting reforms underway.
- Enhance compliance: Implement AML mechanisms for DeFi (e.g., on-chain identity attestations), improve cybersecurity, business continuity, and enforcement powers for CASPs.
- Monitor cross-border: Leverage IOSCO MMoU for cooperation and prepare for global CASP supervision.
- Pilot participation: Explore EU DLT Pilot Regime or similar sandboxes for compliant DeFi activities.
Key Dates
Compliance Impact
Urgency: High – While not yet binding, the report underscores incomplete global implementation (e.g., enforcement gaps, regulatory arbitrage risks), with IOSCO/FSB calling for swift action amid 2025-2026 reviews. This matters as DeFi's growth amplifies systemic risks, prompting "same risk, same rule" enforcement; firms risk non-compliance fines, operational restrictions, or lost innovation opportu
Who is Affected
References
AI-generated analysis. May contain errors or omissions — verify with the original AMF source before acting. Full disclaimer.
Summary
Innovation Markets Decentralised Finance (DeFi): IOSCO publishes its consultation report