The European Central Bank (ECB) has emphasized the need for a comprehensive regulatory framework for decentralized autonomous organizations (DAOs) in the financial sector. In an occasional paper titled “The future of DAOs in finance – in need of legal status,” the ECB highlighted how the rapid advancement of technology has outpaced regulation, posing risks to the safety and sustainable growth of the ecosystem. The current registration framework, designed for a pen-and-paper era, fails to address the liabilities presented by DAOs to investors. The paper concludes that until DAOs are adequately regulated globally to ensure financial stability, smooth operation of payments and securities systems, and consumer protection, their role in the future financial sector will remain limited. Concurrently, ECB executive board member Fabio Panetta has expressed support for the establishment of a regulatory framework and the introduction of a digital euro. Panetta believes that a digital euro could position Europe at the forefront of advanced economies. He emphasizes the importance of replicating the key characteristics of cash, particularly privacy, in the digital sphere. Panetta also supports the European Commission’s legislative proposals for the digital euro, which would ensure that Europeans have access to a public payment option, regardless of whether it is cash or digital, amidst the increasing prevalence of closed-loop solutions in private payment services.

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Information	Details
Geography	Europe
Countries
Sentiment	neutral
Relevance Score	1
People	Ellen Naudts, Fabio Panetta
Companies	European Commission, European Central Bank (ECB)
Currencies	None
Securities	None