Governance and internal controls refer to the structures, processes, and rules established within an organization or a decentralized protocol to ensure effective operation, accountability, and risk management. In the context of digital assets, this involves defining decision-making procedures, managing conflicts of interest, and implementing safeguards against fraud and operational errors. For decentralized autonomous organizations (DAOs), governance often involves token holders voting on proposals to direct the protocol’s development and resource allocation. Strong controls are essential for maintaining integrity and investor confidence.
Context
The discussion around governance and internal controls in crypto news frequently highlights the challenges of decentralization versus the need for clear oversight. A key debate involves how traditional financial governance principles can be applied or adapted to novel blockchain structures. Future developments include the refinement of on-chain governance mechanisms and increased regulatory scrutiny on the internal operations of centralized digital asset service providers.
VASPs must immediately implement robust internal controls, including client asset segregation and minimum capital reserves, to meet the February 2026 compliance deadline.
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