FATF’s New DeFi Test Puts ‘Real Control’ Under Regulatory Spotlight
- FATF’s new test could put DeFi projects with identifiable controllers under scrutiny.
- Regulators can examine governance, upgrades, fees and wallets to find real influence.
- Stablecoins face added scrutiny as authorities look for ways to curb illicit activity.
The Financial Action Task Force (FATF) has introduced a new test that could bring some DeFi protocols under global anti-money laundering and counter-terrorism financing rules.
The approach looks beyond whether a protocol describes itself as decentralized. Instead, regulators can assess who has control or sufficient influence over how a project operates, potentially bringing some DeFi platforms under requirements that apply to virtual asset service providers.
The FATF calls the framework the “control or sufficient influence” test. Regulators can examine governance structures, smart-contract upgrades, tr…
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