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March 24, 2022 04:45 pm

DeFi Projects Rife With Hidden Risks, Global Regulatory Body Warns

The global umbrella organisation for securities regulators has warned that decentralised finance contains myriad hidden conflicts and risks, as authorities begin circling one of the fastest growing corners of cryptocurrency markets. From a report: Comparing the current rise of decentralised finance, or DeFi, to the dotcom bubble, Martin Moloney, secretary-general of the International Organization of Securities Commissions (Iosco), said its explosive growth warranted "closer attention by regulators." Iosco on Thursday plans to publish a 43-page report on DeFi listing more than a dozen "key risks" it has identified in the market. Moloney said the group would gather feedback from market participants and consider drafting guidelines for regulating DeFi. "Most DeFi protocols rely on centralisation in one or more areas, and there are protocols that have a hidden centralised authority and are decentralised in name only," the board of Iosco wrote in the report, which was reviewed by the Financial Times. "What we're seeing is a lot of conflicts of interest are emerging in this space, and a lot of them are not transparent,â Moloney told the FT in an interview. "A lot of the participants in this space are claiming to be doing one thing and actually doing another thing, or actually doing multiple things at the same time."

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