Regulatory oversight in decentralized finance (DeFi) has garnered significant attention recently. It has become a focal point for protocols and firms such as Polygon as they strive to navigate the evolving regulatory landscape and establish a solid foundation in the sector.
In a recent research paper authored by Poylgon’s Chief Legal Officer (CLO) Rebecca Rettig, in collaboration with Michael Mosier from Arktouros, a proposal has been presented to classify “genuinely decentralized” DeFi protocols as critical infrastructure.
Polygon Proposes New Status For DeFi Protocols
The paper begins by clarifying the definition of DeFi and highlighting the unique sources of illicit finance risks in this sector. Unlike traditional finance, DeFi faces risks such as cyber risks, system management risks, and usage risks. By differentiating these risks, the legal authors lay the groundwork for a comprehensive approach to combat illicit finance in DeFi.
The proposed framework comprises three ke
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