DEF Urges UK to Define Regulatory Boundaries to Protect DeFi Developers

DEF Submits Recommendations to FCA

The DeFi Education Fund (DEF), based in Washington, recently submitted recommendations to the UK Financial Conduct Authority (FCA) regarding cryptocurrency asset regulation, emphasizing that regulatory obligations should apply only to entities with 'unilateral control.'

Clarifying the Definition of 'Control'

DEF pointed out that 'control' should be tied to specific operational rights, such as unilaterally initiating or blocking transactions, modifying protocol parameters, or restricting user access.

Avoiding Unintended Consequences for DeFi Developers

The foundation warned that applying regulatory requirements designed for centralized exchanges directly to non-custodial, automated DeFi protocols would be impractical and could hinder innovation.

• Anti-money laundering obligations should not be directly applied to decentralized protocols
• Regulation should focus on entities that actually control user assets
• DEF emphasizes the need for regulators to understand the differences between DeFi and traditional finance