This paper presents factors to consider when designing DeFi regulations. DeFi regulations may be established by imposing obligations on developers and operators, who exist even in extreme decentralization cases. However, the requirements in current financial legislation, which heavily rely on intermediaries’ organization and personnel, are difficult to apply to DeFi. Instead, under DeFi, information can be obtained, analyzed, and aggregated on the blockchain and reported to the authority automatically and regulatory requirements may be reflected in the smart contract and automatically executed. This may require mandatory code audits by supervisory authorities and civil technology experts prior to execution, to check whether legal requirements are embedded in the code. In addition, measures addressing the risk-contagion effects in macroeconomic crisis, potentially arising from DeFi’s connectivity with traditional finance, must be considered.

I. Introduction
II. Components, Characteristics, and Examples of DeFiServices
    A. Components and Characteristics of DeFi Services
    B. Major DeFi Services
III. Necessity to Regulate, Challenges, and Risks posed by DeFi
    A. Risks Inherent in DeFi
    B. Necessity of DeFi Regulation
IV. Points to Consider in Designing DeFi Regulation
    A. Introduction
    B. Who is Subject to Regulation?
    C. Embedded Regulation
    D. Global Nature of DeFi
V. Conclusion

• Young Yoon Park(Attorney-at-Law (Korean Bar) practicing at Yulchon LLC.)