Regulating DeFi: Safeguarding Market Integrity While Managing High Expectations
Digital finance has contributed to the dematerialisation and disintermediation of financial transactions. Technological innovations, namely blockchain technology and smart contracts, have generated an additional ecosystem – decentralised finance (DeFi). Since its main characteristics are pseudonymit...
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| Format: | Article |
| Language: | English |
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University of Zagreb, Faculty of Law
2024-12-01
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| Series: | Croatian Yearbook of European Law and Policy |
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| Online Access: | https://www.cyelp.com/index.php/cyelp/article/view/575 |
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| author | Luka Orešković Ivana Bajakić |
| author_facet | Luka Orešković Ivana Bajakić |
| author_sort | Luka Orešković |
| collection | DOAJ |
| description | Digital finance has contributed to the dematerialisation and disintermediation of financial transactions. Technological innovations, namely blockchain technology and smart contracts, have generated an additional ecosystem – decentralised finance (DeFi). Since its main characteristics are pseudonymity and a lack of intermediaries, which are currently challenging to systemically evaluate, it requires an equally innovative approach from policy makers, regulators, and legislators. The purpose of the paper is twofold. Firstly, it illuminates market trends and highlights the emerging risks associated with DeFi. Secondly, it examines policies, legislative proposals, and existing regulation, focusing on three main areas: consumer protection, anti-money laundering, and determining jurisdiction and applicable law. Drawing on a qualitative analysis of primary sources, namely EU and US legislation, and supported by relevant reports and case studies made by financial authorities, international standard-setting bodies, and business associations, this paper adopts a theoretical approach. It puts forward arguments in favour of the hypothesis that regulatory certainty fosters a favourable environment for the development of financial services in the realm of crypto innovations, a correlation that will hopefully hold significance within the context of DeFi. |
| format | Article |
| id | doaj-art-53bd3b26ae104f54b2f333f12744af5b |
| institution | Kabale University |
| issn | 1845-5662 1848-9958 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | University of Zagreb, Faculty of Law |
| record_format | Article |
| series | Croatian Yearbook of European Law and Policy |
| spelling | doaj-art-53bd3b26ae104f54b2f333f12744af5b2025-02-06T15:52:26ZengUniversity of Zagreb, Faculty of LawCroatian Yearbook of European Law and Policy1845-56621848-99582024-12-01201599010.3935/cyelp.20.2024.575Regulating DeFi: Safeguarding Market Integrity While Managing High ExpectationsLuka Orešković0https://orcid.org/0000-0003-0068-8290Ivana Bajakić1https://orcid.org/0000-0002-4109-0597BDV LegalUniversity of Zagreb Faculty of LawDigital finance has contributed to the dematerialisation and disintermediation of financial transactions. Technological innovations, namely blockchain technology and smart contracts, have generated an additional ecosystem – decentralised finance (DeFi). Since its main characteristics are pseudonymity and a lack of intermediaries, which are currently challenging to systemically evaluate, it requires an equally innovative approach from policy makers, regulators, and legislators. The purpose of the paper is twofold. Firstly, it illuminates market trends and highlights the emerging risks associated with DeFi. Secondly, it examines policies, legislative proposals, and existing regulation, focusing on three main areas: consumer protection, anti-money laundering, and determining jurisdiction and applicable law. Drawing on a qualitative analysis of primary sources, namely EU and US legislation, and supported by relevant reports and case studies made by financial authorities, international standard-setting bodies, and business associations, this paper adopts a theoretical approach. It puts forward arguments in favour of the hypothesis that regulatory certainty fosters a favourable environment for the development of financial services in the realm of crypto innovations, a correlation that will hopefully hold significance within the context of DeFi.https://www.cyelp.com/index.php/cyelp/article/view/575decentralised finance (defi)micacrypto assetsfinancial regulationconsumer protectionamljurisdictional issues |
| spellingShingle | Luka Orešković Ivana Bajakić Regulating DeFi: Safeguarding Market Integrity While Managing High Expectations Croatian Yearbook of European Law and Policy decentralised finance (defi) mica crypto assets financial regulation consumer protection aml jurisdictional issues |
| title | Regulating DeFi: Safeguarding Market Integrity While Managing High Expectations |
| title_full | Regulating DeFi: Safeguarding Market Integrity While Managing High Expectations |
| title_fullStr | Regulating DeFi: Safeguarding Market Integrity While Managing High Expectations |
| title_full_unstemmed | Regulating DeFi: Safeguarding Market Integrity While Managing High Expectations |
| title_short | Regulating DeFi: Safeguarding Market Integrity While Managing High Expectations |
| title_sort | regulating defi safeguarding market integrity while managing high expectations |
| topic | decentralised finance (defi) mica crypto assets financial regulation consumer protection aml jurisdictional issues |
| url | https://www.cyelp.com/index.php/cyelp/article/view/575 |
| work_keys_str_mv | AT lukaoreskovic regulatingdefisafeguardingmarketintegritywhilemanaginghighexpectations AT ivanabajakic regulatingdefisafeguardingmarketintegritywhilemanaginghighexpectations |