DeFi Frontends May Face Separate Regulatory Burden, Lawyer Warns
Even if a DeFi protocol operates autonomously, its frontend can attract its own legal scrutiny and be treated as a standalone service, according to cryptocurrency attorney Sergey Ostrovsky.
DeFi projects frequently limit their legal analysis to the protocol layer and on-chain mechanics—asset flows, control and custody mechanisms, reserve designs, and upgradeability. While this review is essential, it remains incomplete.
In a new ForkLog article, crypto lawyer and Aurum partner Sergey Ostrovsky explains that the frontend can introduce a distinct set of regulatory risks. Under certain circumstances, it may even be classified as an independent service, separate from the underlying smart contracts.
Ostrovsky outlines scenarios where a DeFi frontend could be subject to standalone regulation and suggests strategies for reducing the associated legal exposure.
Source: ForkLog