According to Bloomberg, decentralized finance (DeFi) projects operate through automated contracts and are usually helmed by collective entities rather than single individuals.

This collaborative nature of governance has often posed challenges for regulators. However, leading financial institutions are now questioning the narrative surrounding DeFi.

DeFi’s Central Figures: A Regulatory Perspective

The International Organization of Securities Commissions (IOSCO), a prominent global securities standards body, has provided fresh insights into the DeFi realm. They advise regulators to shift focus towards individuals and organizations that directly control critical aspects such as design, maintenance, and other elements of DeFi ecosystems.

IOSCO’s recommendation stems from a fundamental realization articulated by Tuang Lee Lim, chair of IOSCO’s board-level fintech task force. Lim highlighted a prevalent misconception about DeFi’s decentralization, stating that “responsible persons” can be identified within these arrangements.

Such an approach is evident in recent legal confrontations. A noteworthy instance is the US case concerning Tornado Cash, an Ethereum-based decentralized crypto mixer.  Authorities pinned down two original developers on different charges. 

Notably, the US Treasury Department sanctioned Tornado Cash last year. This event triggered several

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Author: Samuel Edyme

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