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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

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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:

DeFi regulation is no longer a future scenario — it is actively being implemented:

  • The EU's MiCA regulation entered into force in 2024, bringing DeFi platforms under VASP obligations including KYC, AML, and transaction monitoring
  • FATF guidance classifies DeFi platforms meeting service thresholds as VASPs, making them subject to the same obligations as CeFi companies across all FATF member jurisdictions
  • DeFi platforms that pool client assets are subject to securities registration requirements — enforcement against Celsius, BlockFi, Genesis, Nexo, and Coinbase Lend has established that regulators will act regardless of whether the platform is custodial or decentralised

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