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Regulations

DeFi regulations depend on the underlying business model. Different regulations apply for the peer-to-pool-to-peer (most of DeFi) and peer-to-peer (SmartCredit.io). Transactions monitoring is mandated

Borrowing/Lending regulations drive the respective models. So far, the crypto lending sector has two business models:

  • Peer-to-pool-to-peer - This is based on assets pooling and offering interest on these pools. Most of DeFi is pooling assets and is therefore automatically classified as a security product (requires an SEC registration)

  • Peer-to-peer - This is purely peer-to-peer, without pooling any assets. In this case, there is no classification as a securities product (SEC registration is not required). That's what SmartCredit.io is doing.

Virtual Asset Service Provider regulations apply to all CeFI companies. Virtual Asset Service Providers are mandated to do:

We think that not in so far future the following will happen in DeFi:

  • Virtual Asset Service Provider regulations will apply in the future to the DeFi companies, too

  • DeFi companies will be mandated to do the KYC and AML

  • DeFi companies will be mandated to do Transactions Monitoring

  • DeFi companies will be mandated to register their borrowing/lending systems as securities products with the SEC (if they pool the assets)

Tutorial videos:

Further info

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