Decentralised Finance (DeFi): IOSCO publishes its consultation report

The International Organisation of Securities Commissions (IOSCO), of which the AMF is a participating member, has published a consultation report on Decentralised Finance (DeFi). The consultation, which the AMF invites stakeholders and participants to provide feedback to, will run until 19 October 2023.

IOSCO, whose members include a number of financial markets regulators from jurisdictions globally, published its report on 7 September 2023. The report makes recommendations that aim to support the development of rules for Decentralised Finance (DeFi) within member jurisdictions.

The nine recommendations seek to help jurisdictions in achieving their regulatory outcomes, by tackling risks to market integrity and investor protection in the context of regulating DeFi activities and products.

The recommendations cover six key areas, consistent with IOSCO’s objectives and principles for the regulation of securities markets and supporting standards, recommendations, and good practices:

Understanding DeFi Arrangements and Structures
Achieving Common Standards of Regulatory Outcomes
Identification and Management of Key Risks
Clear, Accurate and Comprehensive Disclosures
Enforcement of Applicable Laws; and
Cross-Border Cooperation

Responses to the consultation are to be communicated to DeFiconsultation [at] iosco.org (DeFiconsultation[at]iosco[dot]org) before 19 October 2023.

IOSCO’s work gives echo to the thinking developed by the AMF on DeFi

The AMF has itself taken part in the work that was conducive to the publication of this report, via its participation in IOSCO’s DeFi Working Group.

In its discussion paper published on 19 June 2023, the AMF indicated that regulating DeFi would require a global coordinated approach, given the cross-border nature and reach of DeFi activities, with a view to ensure a global level‐playing field, which should aim to both protect investors and encourage innovation.

Stakeholders are also invited to contribute their thoughts to the AMF discussion on DeFi – in the format of their choice – by 30 September 2023 at innovation [at] amf-france.org (innovation[at]amf-france[dot]org)