FATF says most DeFi platforms have centralized elements and fall under regulation

The Financial Action Task Force said in a report that most decentralized finance, or DeFi, platforms are decentralized in name only and are actually controlled by specific entities, making them subject to FATF regulation. In its July 21 report, “Call for Action to Address New Risks Emerging from DeFi,” the FATF said national regulators should identify those controlling parties and regulate them as virtual asset service providers, or VASPs. It added that, as a last resort, authorities could consider banning platforms from operating in their jurisdictions if they do not cooperate with regulation. The report also identified several major centralized features in DeFi, including concentrated governance token ownership, admin privileges, protocol upgrade authority, and fee and reward structures that accrue to insiders.