• Polygon Labs has submitted its response to the recent discussion paper by Banque de France’s Fintech-Innovation Hub on decentralized finance (DeFi).
• The response advocates for collaborative policymaking and regulation in the DeFi ecosystem, emphasizing the importance of flexibility in defining decentralization.
• Polygon Labs proposes a regulatory framework that focuses on regulating activities rather than targeting technology or software developers.
Polygon Labs Advocates for Collaborative Regulation of DeFi
Polygon Labs, a prominent player in the decentralized finance (DeFi) ecosystem, has submitted its response to the “Decentralized” or ‘disintermediated’ finance: what regulatory response?” discussion paper by the Fintech-Innovation Hub of the ‘Authorite de controle prudentiel et de resolution’ (ACPR), a division of Banque de France. The response reflects Polygon Labs’ commitment to collaborative policymaking and regulation in the rapidly evolving world of DeFi.
Key Elements of ACPR Discussion Paper
The ACPR’s discussion paper delves into various aspects of the DeFi ecosystem, including three primary layers identified by ACPR: L1s/L2s, smart contract app layer, and systems enabling user access to DeFi. It also explores oracles, decentralized governance, and stablecoins and proposes different approaches to ensure safety, stability, and informed decision-making for users of DeFi protocols.
Flexibility Key to Effective Regulation
Polygon Labs appreciates ACPR’s comprehensive examination of the DeFI landscape and embraces a collaborative approach adopted in shaping policy and regulation for this emerging technology. While generally supportive of ACPR’s definition of DeFi and its core attributes, Polygon Labs emphasizes the importance of flexibility in defining decentralization to align with desired regulatory outcomes rather than rigid criteria.
Proposals By Polygon Labs
Polygon Labs advocates for a regulatory framework that focuses on regulating activities rather than targeting technology or software developers. The company cautions against direct regulation of permissionless blockchains opposes transferring all “financial functions” in DeFi to private blockchains as it would erode efficiency and transparency offered by smart contracts.
Overall, Polygon Lab’s response reflects their commitment towards collaborative policymaking which is essential for effective regulation within this rapidly evolving industry while balancing oversight with innovation for users‘ safety and security.