Decentralized autonomous organizations (DAOs) need a comprehensive regulatory framework if they are to make a place in the future of the financial sector, suggests the European Central Bank (ECB) occasional paper (OP).
The OP “The future of DAOs in finance – in need of legal status,” authored by Ellen Naudts, Market Infrastructure Expert Payments at ECB, highlighted how technology outpaced regulation in relation to DAOs — having a negative impact on the safety and sustainable growth of the ecosystem.
Exponential growth of the DAO ecosystem amid uncertain regulatory conditions. Source: ecb.europa.eu
As DAOs continue to flood the market with unique offerings, enforcing a “registration framework that was built for a pen-and-paper era” fails to address the various liabilities they present to investors.
“Until DAOs are adequately regulated globally, in the sense that the abovementioned challenges have been solved so that they do not and will not in future pose a serious threat to financial stability, payments and securities systems operate smoothly and consumers are properly protected, the place for DAOs in the financial sector of the future will necessarily remain limited,” the paper concluded.
Concurrent with calls to establish a regulatory framework, ECB executive board member Fabio Panetta recently said the digital euro could “put Europe at the forefront of advanced economies.”
A digital euro would be a new form of central bank money, says Executive Board member Fabio Panetta. It is now up to legislators to ensure it would replicate key characteristics of cash in the digital sphere, particularly its privacyhttps://t.co/nQJzYylwpV
Panetta supported the European Commission’s legislative proposals for the digital euro, stating that it would ensure Europeans always have access to a public payment option, whether cash or digital, even as “closed-loop solutions are becoming increasingly prevalent” in private payment services.
After yesterday’s royal welcome from the King, French President Emmanuel Macron will get down to business today, meeting Prime Minister Sir Keir Starmer for lunch, after PMQs.
But, as Sky News’ Sam Coates and Politico’s Anne McElvoy discuss on this episode, away from the pomp, Sir Keir’s in-tray doesn’t look any less challenging.
It includes a headache for Health Secretary Wes Streeting as resident doctors, formerly known as junior doctors, announce a new strike – and there is as a punchy warning from the OBR on making financial promises to the public.
Also today, the welfare bill returns to the House of Commons, with reports of another rebellion brewing.