International securities regulators are setting up a new task force to probe any regulations needed for decentralized finance (DeFi), saying it poses risks and its logic doesn’t add up.
- The International Organization of Securities Commissions (IOSCO) said in a statement published Thursday that its members had resolved to take timely, coordinated action to control what it called significant risks of the emerging DeFi market, which it estimated to be worth around $200 billion.
- IOSCO members regulate more than 95% of the world's securities markets in around 130 jurisdictions, and include the U.S. Securities and Exchange Commission (SEC) and U.K. Financial Conduct Authority (FCA).
- Supposedly decentralized finance is anything but, IOSCO claimed in its statement. In practice, DeFi often involves central actors who retain control, the report said. IOSCO also cast doubt on the claim stablecoins must be backed and collateralized, saying that in practice users would not always be able to redeem holdings at face value.
- The new task force will be chaired by Singapore official Tuang Lee Lim. A better understanding of the market will help show what regulations are needed, IOSCO said.
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