The Financial Stability Board (FSB) released a report stating that it will work with other international standard setters to determine how decentralized financial (DeFi) activities should be regulated in different jurisdictions.
The FSB will also explore the extent to which its proposed policy recommendations for the crypto space could be strengthened to address DeFi-specific risks, the report said. Additionally, it plans to collaborate with other international standard-setters on how to fill the data gap in measuring and monitoring DeFi’s interlinkages with traditional finance.
The FSB stated that DeFi is not fundamentally different from traditional finance in terms of the functions it performs or the vulnerabilities it faces. While its findings show that the interconnection between DeFi, the real economy, and traditional finance is limited, “if the DeFi ecosystem grows substantially, the scope for spillover effects will increase.
It will carry out additional work analyzing the impact of asset tokenization, as this may increase the connection between the DeFi market and the real economy. The Financial Stability Board plans to release a final report on the international regulatory framework for encryption in July 2023.