According to CoinDesk, the International Organization of Securities Commissions (IOSCO) has published a report stating that governments should identify those responsible for decentralized finance (DeFi) applications and regulate them in the same way as traditional financial market players. IOSCO, whose members include the U.S. Securities and Exchange Commission and the U.K. Financial Conduct Authority, is concerned that innovative financial applications could be easily manipulated and questions the idea that there is no central authority to hold legally accountable.

DeFi, which allows lending or trading to occur through algorithms, tokens, and decentralized autonomous organizations (DAOs), challenges the principles of regular financial regulation that rely on a central person or company to maintain market fairness and protect investors. However, IOSCO officials believe that the decentralization of DeFi is an illusion and are urging national regulators to take action. Tuang Lee Lim, Chair of IOSCO's Board-Level Fintech Task Force, stated that there is a common misconception that DeFi is truly decentralized and governed by autonomous code or smart contracts, but in reality, 'responsible persons' can be identified.

IOSCO's recommendations suggest that national regulators should determine who is truly in charge and assign them obligations to uphold investor protection and market integrity, similar to traditional finance (TradFi). Depending on how existing TradFi rules are written, DeFi may be noncompliant or simply outside of scope, but officials warn that pseudonymity and opaque governance may make it more difficult to identify collusion or conflicts of interest, leading to risks such as front-running, hacks, or excessive leverage. The report comes shortly after the Financial Stability Board and International Monetary Fund jointly called for a comprehensive, global approach to crypto regulation as leaders from the world's twenty largest economies gather for a summit in New Delhi, India.