On 19 December 2023, the International Organization of Securities Commissions (IOSCO) published a final report with policy recommendations to address market integrity and investor protection issues in decentralised finance (DeFi).

The policy recommendations, which are principles-based and outcomes-focused, are addressed to relevant authorities and complement IOSCO’s policy recommendations for crypto and digital assets markets issued in November 2023. Concurrently with the publication of the final report, IOSCO is publishing an ‘umbrella note’ to explain the interoperability between the two sets of recommendations.

The policy recommendations cover six key areas:

  • 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.
  • Cross-border cooperation.

While the recommendations are not directly addressed to market participants, all crypto-asset markets participants are strongly encouraged to carefully consider the expectations and outcomes articulated through the recommendations and the supporting guidance in the conduct of regulated and cross-border activities.