FATF Urges Regulators to Treat Controlled DeFi as Financial Firms

The Financial Action Task Force, the global anti-money-laundering standard setter whose rules reach more than 200 jurisdictions, says the “decentralized” label does not determine whether a DeFi project falls outside financial regulation. Concentrated governance tokens, administrative privileges, upgrade controls, front-end ownership and economic benefits can reveal an identifiable person with “control or sufficient influence.” Such actors may qualify as virtual asset service providers under FATF Recommendation 15 and face licensing, customer checks and supervision.

In a report released July 21, 2026, FATF said 132 of 142 surveyed jurisdictions, or nearly 93%, had not applied its standards to qualifying DeFi arrangements. Only 26 had assessed the risks, four had licensing rules and just two had licensed or registered a platform. FATF urged authorities to identify controllers, build proportionate oversight and press financial institutions and VASPs to conduct due diligence; where compliance remains impossible, they should stop dealing with the protocol, while jurisdictions could impose a ban as a last resort.