TL;DR
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Yesterday, there was a new bill introduced to the US Senate titled “Crypto-Asset National Security Enhancement Act of 2023,” which would require DeFi protocols to impose bank-like controls on their users.
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Anyone who ‘controls’ a DeFi protocol or makes available an application to use the protocol,” will be on the hook for any fraud or bad actors.
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Following the Ripple ruling last week, the US Government could go either way – push harder for regulation, or accept that crypto is here to stay.
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As long as regulation is fair and equitable, we’ll take it.
Full Story
Yesterday, there was a new bill introduced to the US Senate – and its…hmmm…Interesting.
The bill, titled “Crypto-Asset National Security Enhancement Act of 2023,” (bit of a long title if you ask us) would require DeFi protocols to impose bank-like controls on their users.
Let’s break this down.
The whole idea behind DeFi – decentralized finance – is that there is no individual who has control over the funds that flow through a platform.
Remember FTX? That was a centralized exchange. We all know how that story ended.
But UniSwap, PancakeSwap, 1Inch etc. – they’re all decentralized exchanges (DEX’s). When people had their money stuck in FTX, those DEX’s (and plenty of other DeFi products) continued with business as usual.
The whole point of DeFi is that there isn’t a single point of failure (i.e. no individual person that can make or break a platform or application).
Problem is, that system doesn’t really work for the lawmakers.
So here’s what’s being proposed: “Anyone who ‘controls’ a DeFi protocol or makes available an application to use the protocol,” will be on the hook for any fraud or bad actors.
“If nobody controls a DeFi protocol, then – as a backstop – anyone who invests more than $25 million in developing the protocol will be responsible for these obligations,” according to the bill’s briefing.
Following the Ripple ruling last week, the US Government could go either way – push harder for regulation, or accept that crypto is here to stay.
For now, it seems like they’re taking option A, but hey, as long as regulation is fair and equitable, we’ll take it.
