DeFi regulation remains almost nonexistent worldwide, with only four jurisdictions requiring DeFi protocols covered by their crypto rules to obtain a license or register, and just two doing so in practice, The Coinformer has learned after reviewing a new report from the Financial Action Task Force, an intergovernmental anti-money-laundering watchdog.
- Only 26 of the 142 jurisdictions surveyed had assessed DeFi's money-laundering and terrorist-financing risks, while another 12 were working on an assessment.
- Meanwhile, 132 jurisdictions (or 93%) hadn't identified any DeFi protocol operating within their borders that qualified as a crypto service provider.
The main obstacle is deciding who's responsible for a supposedly decentralized protocol. As FATF explained, regulators struggle to determine whether developers or DAO bodies exercise enough control to be held accountable.
"Jurisdictions report persistent difficulties in identifying qualifying DeFi arrangements within their regulatory perimeter, due to their cross-border nature, frequent lack of formal legal structures, and the absence of clear regulatory anchors."
FATF
FATF
FATF's rules apply when identifiable people control a DeFi protocol or when a platform is centralized in practice
Fully decentralized protocols remain outside those rules. Only one jurisdiction reported taking enforcement action against a DeFi project.
Fully decentralized protocols remain outside those rules. Only one jurisdiction reported taking enforcement action against a DeFi project.
- FATF's figures were based on self-reported survey responses that weren't independently verified.