DeFi Oversight: Consensys Advocates for Nuanced Approach Following IOSCO’s Report

MetaMask’s parent firm, Consensys, has commented on IOSCO’s proposal to identify “responsible persons” in DeFi projects. The International Organization of Securities Commissions (IOSCO) had recently weighed in on the matter and recommended that governments should identify the “Responsible Person” behind ostensibly decentralized finance applications and subject them to regulatory oversight similar to conventional financial market participants. Consensys – has encouraged the global standard setter to clarify that some DeFi arrangements may have no “Responsible Person.” Consensys argued that IOSCO’s recommendation seems to presume that, in any given DeFi arrangement or activity, it is always possible to identify a Responsible Person who could be subject to regulatory obligations. It implies that decentralized systems either don’t exist or shouldn’t. Consensys admitted that the line between centralized and decentralized finance is more of a spectrum than a strict boundary but said that IOSCO’s recommendation oversimplifies this distinction. As such, taking a binary approach to identifying Responsible Persons “seems to encourage regulators to find such a party “at any cost.” Consensys advocated the need for a nuanced approach in determining Responsible Persons in DeFi. The firm added that regulatory obligations should align with the level of control, primarily targeting the centralized end of the spectrum. Source