Lost in a fog of compliance
Updated: Aug 19, 2019
So you've got a great idea for DeFi. Where do you start?
First things first....
What are you going to do? What's your project? How are you getting customers? Who will those customers be? Do you touch fiat? Do you need to undertake KYC? Could a partner help? Where are you clients? What are the rules that might impact and slow you down?.
All of the above are very valid questions. With DeFi, you can't just code and hope.
Laws have been written over decades, even centuries to protect people and give a right of dispute. Just because you're DeFi doesn't mean you get to forget about regulations, it mean you must take even more care than ever.
The regulatory framework is struggling to keep up as new concepts are tabled by very different teams to previous innovation. Financial innovation used to come through the banks, now software engineers are driving DeFi and providing challenge to all sorts of financial models.
For example, new rules are required around custody of client assets, current rules weren't written for digital key management. What if you don't need to have assets in custody?
New rules are being drafted about tokens. Token taxonomies around the world are not harmonised.
Different positions could be taken on anti money laundering, the UK's HMT have suggested that open source code might face KYC requirements. We're hopeful this will be argued against strongly in the coming weeks.
Forewarned is forearmed. Get on the front foot. Regulatory expertise is needed on your team, we can help. If you want help, let's have a chat.