The Next Frontier: Frameworks for DeFi Governance and Regulation

Written by Claus Mortensen, Principal Analyst, Ecosystm. 

August 2024

Discussions on the regulation of decentralised finance (DeFi) have gained momentum over the past few years. The International Organization of Securities Commissions (IOSCO) has finalised its recommendations on how supervisory oversight could be applied in its Final Report with Policy Recommendations for Decentralized Finance (DeFi), which are predicated on the concept of 'Responsible Persons'. Similarly, as a part of Project Guardian, the Monetary Authority of Singapore (MAS) is exploring the concept of 'Trust Anchors', which are regulated financial institutions that screen, verify and issue verifiable credentials to entities that wish to participate in DeFi protocols.

However, the question still remains: What are the challenges and opportunities when it comes to DeFi regulation? Why has it been so difficult to achieve this? Is there a need for more private-public partnerships and awareness programs? And finally, how are DeFi players integrating compliance into their very infrastructure?

These were some of the themes that emerged at the closed-door, invitation-only Elevandi Insights roundtable at the Point Zero Forum 2024 hosted by Ripple and TRM Labs. A select group of global regulators, investors, technology providers, and senior leaders from financial institutions joined the session to share their insights on the evolving landscape of DeFi regulation, the challenges in implementation, and innovative approaches to compliance in decentralised systems.

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