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 persons retaining "control or sufficient influence" in a DeFi arrangement, its rules already apply, regardless of the project's claimed degree of decentralization.
The FATF said that in practice, many DeFi projects still frequently have centralized elements, including concentrated governance tokens, administrative permissions, upgrade control rights, and fees and rewards flowing to insiders. The report categorizes DeFi into three types: those with identifiable controllers, those that are actually centralized but the operators are hidden, and truly leaderless ones. Only the last category does not fall under its standards.
According to the report, nearly 93% of jurisdictions that responded to the survey have not yet 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 could prohibit their local operations as a last resort. The report also noted that DeFi's total value locked this year reached $86.6 billion, an increase of about 85% compared to 2023.
The FATF said that in practice, many DeFi projects still frequently have centralized elements, including concentrated governance tokens, administrative permissions, upgrade control rights, and fees and rewards flowing to insiders. The report categorizes DeFi into three types: those with identifiable controllers, those that are actually centralized but the operators are hidden, and truly leaderless ones. Only the last category does not fall under its standards.
According to the report, nearly 93% of jurisdictions that responded to the survey have not yet 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 could prohibit their local operations as a last resort. The report also noted that DeFi's total value locked this year reached $86.6 billion, an increase of about 85% compared to 2023.
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