> For the complete documentation index, see [llms.txt](https://www.mica.wtf/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://www.mica.wtf/eu-level/soft-law/iosco/final-report-with-policy-recommendations-for-decentralized-finance-defi.md).

# IOSCO DeFi Policy Recommendations

|               |                                                                                                                             |
| ------------- | --------------------------------------------------------------------------------------------------------------------------- |
| **Authority** | IOSCO                                                                                                                       |
| **Reference** | FR07/2023                                                                                                                   |
| **Status**    | Published                                                                                                                   |
| **Published** | December 2023                                                                                                               |
| **Scope**     | DeFi policy recommendations relevant to MiCA Article 142, CASP supervision, market integrity, and decentralisation analysis |
| **Source**    | [IOSCO report PDF](https://www.iosco.org/library/pubdocs/pdf/IOSCOPD754.pdf)                                                |

### What this document covers

IOSCO's final report setting out nine policy recommendations for the regulation of decentralised finance, addressed to securities, derivatives, and other financial-market regulators globally. The report concludes that despite DeFi's claims of decentralisation, in most arrangements there are identifiable "Responsible Persons" who can be brought within regulation. Together with IOSCO's parallel Crypto and Digital Asset (CDA) recommendations, it forms the IOSCO baseline that informs MiCA's Article 142 work on DeFi and ESMA / EBA supervisory expectations.

### Key provisions

* Recommendation 1 — Analyse DeFi products, services, arrangements, and activities to assess regulatory responses: regulators should look through the form of "decentralisation" to identify Responsible Persons.
* Recommendation 2 — Identify Responsible Persons: persons exercising decisive influence over the protocol (governance, upgrade keys, fee collection, front-end operation) should be treated as in-scope intermediaries.
* Recommendation 3 — Achieve common standards of regulatory outcomes: apply the principle "same activity, same risk, same regulation".
* Recommendation 4 — Require identification and addressing of conflicts of interest by Responsible Persons.
* Recommendation 5 — Require identification and addressing of material risks, including operational, technological, and protocol risks.
* Recommendation 6 — Require clear, accurate, and comprehensive disclosures to users.
* Recommendation 7 — Enforce applicable laws against Responsible Persons.
* Recommendation 8 — Promote cross-border cooperation and information sharing among regulators.
* Recommendation 9 — Understand and assess interconnections among the DeFi market, the broader [crypto-asset](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset.md) market, and traditional finance.

### Relevant MiCA articles

[Article 2](/mica/title-i-subject-matter-scope-and-definitions-art.-1-3/article-2.md) - Scope, including the Article 2(4) full-decentralisation exemption that mirrors the IOSCO framing.

[Article 142](/mica/title-ix-transitional-and-final-provisions-art.-140-149/article-142.md) - Report on the development of crypto-assets including DeFi.

### Source

* [IOSCO FR07/2023 — Policy Recommendations for DeFi (PDF)](https://www.iosco.org/library/pubdocs/pdf/IOSCOPD754.pdf)

### Related

* [crypto-asset](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset.md) — defined term used on this page
* [crypto-asset](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/crypto-asset.md) — defined term used on this page


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