red 
The International Organization of Securities Commissions (IOSCO) – the global umbrella body for securities regulators – is issued a public consultation on policy recommendations to address risks associated with market integrity and investor protection arising from decentralized finance (DeFi).
The nine recommendations cover six areas that are consistent with existing IOSCO goals, principles and standards for securities regulation. They are:
- understanding DeFi arrangements and structures;
- achieving common standards of regulatory outcomes;
- identification and management of key risks;
- clear, accurate and comprehensive disclosures;
- enforcement of applicable laws; and
- cross-border cooperation.
“There is a common misconception that DeFi is truly decentralized and governed by autonomous code or smart contracts,” according to IOSCO. “In reality, regardless of the operating model of a DeFi arrangement, ‘responsible persons’ can be identified.”
It is therefore important that IOSCO members identify these individuals – whether legal or natural – which should be responsible for safeguarding investor protection and market integrity. IOSCO added that regulators should use existing laws or introduce new ones where necessary to get a full picture of DeFI, including the identities of the people and companies involved.
Taiwan will issue guidelines for the crypto industry by the end of September
Based on the September 7 report published by the Central News Agency of Taiwan, officials confirmed that the Financial Supervisory Commission (FSC) has completed an initial draft of 10 guiding principles for the virtual asset sector that will be made public by the end of the month.
The Guiding Principles are the first of three upcoming measures that the FSC previously announced it would introduce in phases to monitor and support the industry in Taiwan. The announcement comes after Executive Yuan designated the FSC in March 2023 as the authority for virtual assets used for investments and payments.
While technically non-binding, the FSC has previously suggested it will monitor industry compliance and take the necessary steps to ensure compliance – including relying on existing laws to enforce or implementing new laws in the future.
You can read more in our more extensive analysis covering FSC’s Guiding Principles here.
Co-founder of OneCoin scheme sentenced to 20 years in prison
Karl Greenwood – co-founder of the OneCoin pyramid scheme – was convicted from a federal court in the Southern District of New York to 20 years in prison for his role in the project. He was also ordered to forfeit $300 million – the approximate amount he earned from the scheme – for being OneCoin’s “global master distributor and leader of the MLM (multi-level marketing) network through which the fake cryptocurrency was marketed and sold.”
OneCoin started in Bulgaria in 2014, branding itself as a cryptocurrency and telling investors that the token could be mined and had real value. In reality, it did not exist and was a pyramid scheme where investors were rewarded for bringing in new participants. OneCoin is estimated to have defrauded more than $4 billion from at least 3.5 million victims.
Another co-founder of the scheme, Ruja Ignatova, known as the “Crypto Queen” – who was added to the FBI’s most wanted list last year – remains at large.
Singapore bans founders of crypto hedge fund Three Arrows Capital
On 14 September, the Monetary Authority of Singapore (MAS) announced that it had issued banning orders – effective a day earlier – against the two founders of cryptocurrency hedge fund Three Arrows Capital, Zhu Su and Kyle Livingston Davies for violating the country’s securities laws.
Specifically, the two men were banned from participating in the management, being a director or becoming a significant shareholder of any regulated capital market services company in Singapore for a period of nine years. They also cannot carry out any regulated activity under securities law, such as fund management, asset custodial services and product financing.
The enforcement action against them comes more than a year after MAS reprimanded Three Arrows Capital in June 2022 for various offenses – including providing false information to the regulator and exceeding the assets under management threshold allowed for a registered fund management company.
In its statement, MAS said further investigations into Three Arrows Capital have since revealed that the company has not established an adequate risk management framework to identify, monitor and address the risks associated with investments in cryptocurrencies and digital assets under its management.
Crypto Regulation DeFi Global
