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FATF draft guidance targets DeFi with compliance

Published 05/16/2021, 07:11 AM
Updated 05/17/2021, 09:20 AM
FATF draft guidance targets DeFi with compliance

The decentralized finance, or DeFi, space exploded over the last year, with a total value locked in DeFi of around $90 billion, according to DeBank. The DeFi ecosystem includes projects like Maker, Aave, Compound, Uniswap and more, with new ones rapidly emerging. DeFi is a broad concept to describe an emerging area of finance built using decentralized technological tools and characterized by being open, permissionless, disintermediated and with no single point of failure.

The spectrum of DeFi is broad, and the exact degree and mixture of various technological and governance features determine how decentralized a particular DeFi project is, or whether it is a DeFi at all. DeFi currently includes services like lending and borrowing, derivatives, margin trading, payments, asset management and nonfungible tokens, and it will expand and diversify in the future.

Agata Ferreira is an assistant professor at the Warsaw University of Technology and a guest professor at a number of other academic institutions. She studied law in four different jurisdictions, under common and civil law systems. Agata practiced law in the U.K. financial sector for over a decade in a leading law firm and in an investment bank. She is a member of a panel of experts at the EU Blockchain Observatory and Forum and a member of an advisory council for Blockchain for Europe.

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