RegTech is the use of technology, particularly information technology, in monitoring, compliance and regulatory reporting by industry, and in supervision and enforcement by regulators. For industry, regulators and policymakers, the pace of transformation in digital financial products and systems requires ever greater use of RegTech. In this sense, FinTech demands RegTech. While the principal regulatory objectives of financial stability, prudential safety, consumer protection, and promoting competition remain, their attainment increasingly requires the deployment of sophisticated technology by both reporting entities and regulators. The increasing use of RegTech prompts a paradigm shift necessitating the reconceptualisation of financial regulation.

This chapter analyses the meaning, legal implications, and policy consequences of Decentralised Finance (‘DeFi’). Decentralisation has the potential to undermine traditional forms of accountability and erode the effectiveness of traditional financial regulation and enforcement. At the same time, where parts of financial services are decentralised, there will be a reconcentration in a different (but possibly less regulated, less visible, and less transparent) part of the financial services chain. DeFi regulation could and should focus on this reconcentrated portion to ensure effective oversight and risk control. In fact, DeFi requires regulation in order to achieve its core objective of decentralisation. Furthermore, DeFi may further the idea of ‘embedded regulation’– building regulatory approaches into the design of decentralised infrastructure, potentially decentralising both finance and its regulation in the ultimate expression of RegTech.