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 if there are identifiable individuals retaining "control or sufficient influence" within a DeFi arrangement, its rules already apply, regardless of how decentralized the project claims to be.
The FATF stated that in practice, many DeFi projects still frequently contain centralized elements, including concentrated governance tokens, administrative privileges, upgrade control rights, as well as fees and rewards flowing to insiders. The report categorizes DeFi into three types: those with identifiable controllers, those that are actually centralized but whose operators remain hidden, and genuinely leaderless ones. Only the last category does not fall under its standards.
The report indicates that nearly 93% of jurisdictions that responded to the survey have not applied the relevant standards to any qualifying DeFi arrangements. Out of 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 into smart contracts or interfaces. For platforms that refuse to cooperate, jurisdictions may consider banning their local operations as a last resort. The report also notes that DeFi's total value locked has 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 concentrated governance tokens, administrative privileges, upgrade control rights, as well as fees and rewards flowing to insiders. The report categorizes DeFi into three types: those with identifiable controllers, those that are actually centralized but whose operators remain hidden, and genuinely leaderless ones. Only the last category does not fall under its standards.
The report indicates that nearly 93% of jurisdictions that responded to the survey have not applied the relevant standards to any qualifying DeFi arrangements. Out of 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 into smart contracts or interfaces. For platforms that refuse to cooperate, jurisdictions may consider banning their local operations as a last resort. The report also notes that DeFi's total value locked has reached $86.6 billion this year, an increase of approximately 85% compared to 2023.
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