Today IOSCO – the International Organization of Securities Commissions – published a report on Decentralized Finance (DeFi) which identifies some novel DeFI services but questions whether many DeFi markets are entirely peer to peer (P2P) with no centralized control. It also notes that blockchain DeFi services are often similar to traditional finance (TradFi) services but “with weaker regulation and increased risks for investors.”
In light of the report, it is setting up a new task force headed by Tuang Lee Lim, the Assistant Managing Director of the Monetary Authority of Singapore (MAS). “The report provides evidence of both the potential opportunities as well as significant risks that DeFi can bring to investors and markets,” said Mr Lim.
As an example, the disintermediation enabled through DeFi can save significant costs. But the report authors note that some of these intermediaries provide roles as gatekeepers, for investor protection to help investors understand risks, and helping to minimize fraud.
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