GERMANY Trends and Developments Contributed by: Wolfgang Richter, gunnercooke GmbH
Outlook The phrase “centralised decentralisation” captures the problem. A protocol may be decentralised at the settlement layer but centralised at the access layer; decentralised at the AMM layer but centralised at the oracle layer; and decentralised in code but centralised in governance. A functional legal analysis should ask not whether decentralisation exists in the abstract, but whether the centralised element controls the regu- lated activity. Although regulatory frameworks differ across jurisdictions, an international trend is emerging towards function-based and control-oriented assess- ments of decentralised structures. In light of these developments, the EU framework, in terms of regula- tory clarity, appears well positioned to consolidate its leading role in this area.
for instance, may shift from being a potential CASP to a benchmark administrator, subject to a different but equally comprehensive set of obligations. Ultimately, functions such as KYC/AML gatekeeping may be regarded as separate compliance obligations and, in themselves, should not automatically trigger authorisation requirements for the underlying proto- col. This supports an interpretative approach under which regulation remains focused on the entities that truly control the core financial activity. Global landscape Comparable principles – a control-based, function-by- function test with carve-outs reserved for genuinely operator-less infrastructure – are emerging across the major jurisdictions, framed in different vocabularies. Switzerland provides the closest structural analogue, expressly excluding fully decentralised infrastruc- tures without a direct operator from FinMIA, apply- ing a “same risks, same rules” substance-over-form approach, and treating AMLA financial intermediary obligations as separate from licensing. The UK fol- lows the same direction with the FCA’s DP25/1 and CP25/40, applying a “clear controlling person” test that amounts, in substance, to a function-by-function control analysis. The US reaches comparable con- clusions through case law ( Risley v Uniswap Labs , Sarcuni v bZx DAO , CFTC v Ooki DAO ) and emerging legislation (the pending CLARITY Act). Singapore is the principal counter-position, applying activity-based tests with no operator-less carve-out. International standard-setters – IOSCO’s 2023 Final Report on DeFi and the FATF Updated Guidance on VASPs – push harder against the carve-outs but apply the same control-and-influence test structurally. The European framework’s distinctive contribution in Recital 22 is its explicit textual recognition of the operator-less case; the other frameworks reach the same destina- tion through agency guidance, case law or statutory drafting.
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