TechFlow reports that the International Organization of Securities Commissions (IOSCO) has released a report recommending governments regulate decentralized applications (DApps) to ensure investor protection and market integrity.
IOSCO's members include institutions such as the U.S. Securities and Exchange Commission and the UK Financial Conduct Authority, who are concerned that new financial applications are vulnerable to manipulation, as these applications appear to lack central control or legal liability.
Traditional financial regulation typically relies on central entities to ensure market fairness and investor protection, whereas decentralized finance (DeFi) disrupts this model. IOSCO recommends that national regulators identify responsible parties for DApps and impose on them obligations equivalent to those in traditional financial markets.
