How Does ‘Decentralization’ Complicate Regulatory Enforcement Actions?
Decentralization complicates regulatory enforcement because there is no single, central entity or person to serve with legal papers or compel to act. Regulators must target developers, oracle providers, or interface operators, but the core smart contract remains autonomous.
This lack of a clear intermediary or single point of control makes it difficult to impose fines, compel code changes, or enforce court orders.
Glossar
Single Point of Control
Vulnerability ⎊ The existence of a Single Point of Control introduces a critical security and systemic vulnerability, as its compromise can lead to the failure of an entire decentralized finance protocol or the manipulation of a derivatives market.
Regulatory Enforcement
Oversight ⎊ Regulatory enforcement within cryptocurrency, options trading, and financial derivatives centers on maintaining market integrity and investor protection, particularly given the novel risks inherent in decentralized finance and complex instruments.
Enforcement
Regulation ⎊ Enforcement within cryptocurrency, options trading, and financial derivatives primarily manifests as the application of existing securities laws and the development of novel frameworks to address unique risks.