FATF: DeFi with Identifiable Controllers Should Be Regulated as Virtual Asset Service Providers
2026-07-22 14:44
Odaily Planet Daily News The Financial Action Task Force (FATF) stated in a report released on Tuesday that its rules already apply to DeFi arrangements where identifiable individuals retain "control or sufficient influence," regardless of how decentralized the project claims to be.
The FATF stated that in practice, many DeFi projects still frequently contain centralized elements, including the concentration of governance tokens, administrative permissions, upgrade control, and fees and rewards flowing to insiders. The report categorizes DeFi into three types: those with identifiable controllers, those that are actually centralized but operators remain hidden, and truly leaderless ones. Only the last category is not subject to its standards.
The report stated that nearly 93% of jurisdictions that responded to the survey have not yet applied the relevant standards to any qualifying DeFi arrangements. Of the 142 jurisdictions, only 26 have assessed the risks, 4 have established licensing rules, and only 2 have ever registered or licensed relevant platforms.
The FATF requires countries to mandate or encourage DeFi projects to embed anti-money laundering controls within smart contracts or interfaces. For platforms that refuse to cooperate, jurisdictions may resort to banning them from operating locally as a last resort. The report also noted that DeFi's total value locked (TVL) reached $86.6 billion this year, an increase of approximately 85% compared to 2023.
The FATF stated that in practice, many DeFi projects still frequently contain centralized elements, including the concentration of governance tokens, administrative permissions, upgrade control, and fees and rewards flowing to insiders. The report categorizes DeFi into three types: those with identifiable controllers, those that are actually centralized but operators remain hidden, and truly leaderless ones. Only the last category is not subject to its standards.
The report stated that nearly 93% of jurisdictions that responded to the survey have not yet applied the relevant standards to any qualifying DeFi arrangements. Of the 142 jurisdictions, only 26 have assessed the risks, 4 have established licensing rules, and only 2 have ever registered or licensed relevant platforms.
The FATF requires countries to mandate or encourage DeFi projects to embed anti-money laundering controls within smart contracts or interfaces. For platforms that refuse to cooperate, jurisdictions may resort to banning them from operating locally as a last resort. The report also noted that DeFi's total value locked (TVL) reached $86.6 billion this year, an increase of approximately 85% compared to 2023.
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