EU Commission Issues Proposal for Study of Automated DeFi Supervision

As a precursor to increased EU regulation, the European Union Commission has called for a study on “embedded supervision” of decentralized finance (DeFi) protocols on the Ethereum blockchain. Automated DeFi Supervision Pilot Program The pilot program’s main objective is to “create, deploy, and test” an integrated system to monitor operations in the DeFi sector. To track DeFi activities simultaneously, researchers would collect automated supervisory data directly from the Ethereum blockchain. The European Parliament voted the Markets in Crypto Assets (MiCA) bill into law on October 10. The historic legislation would establish a comprehensive legal framework for the area’s digital assets, including offering marketing rules for cryptocurrency businesses and investor protections. The pilot program would go on for a minimum of six months and is estimated at €250,000 (approximately $242,500). Applications are to remain open until December 1. EU policy and strategy head at Circle tweeted that “the capability of regulatory bodies to automatically monitor compliance by reading public blockchain data could drastically reduce the need for market participants to collect, verify & deliver data to authorities actively.” DeFi and Ethereum’s open-source nature is a vantage point for regulatory watchdogs to track protocol behavior, according to lawmakers in the Commission. According to the Commission’s document, the study would concentrate on ...