The DeFi Education Fund (DEF), a U.S.-based organization, has advised the UK Financial Conduct Authority (FCA) to adopt a functional definition of "control" in its upcoming crypto asset regulations. DEF argues that regulatory responsibilities should be limited to entities with unilateral control over user funds or transactions, rather than those merely involved in developing decentralized protocols.
DEF emphasized that regulation should target specific operational capabilities, such as the ability to initiate or block transactions, modify protocol parameters, or exclude users. The organization warned against misclassifying software developers as intermediaries, which could impose inappropriate prudential, reporting, and access requirements on non-custodial automated protocols. DEF's submission is part of the FCA's consultation on integrating DeFi into its digital assets framework, advocating for a control-based principle linked to actual operational power.
DeFi Education Fund Urges UK FCA to Exclude Non-Custodial Developers from Intermediary Regulations
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