The US Senate is once again discussing cryptocurrency and decentralized finance (DeFi) regulation, proposing a new bill. Participants in the crypto market express concerns about lawmakers' approach to this topic.
DEF's Position in Response to the Bill
This week, the Decentralized Finance education fund (DEF), backed by major crypto players such as a16z Crypto and Uniswap Labs, submitted a response to the Senate Banking Committee. The group is not opposing DeFi regulation but insists that decentralized developers should not be treated like central banks.
The Difference Between DeFi and Traditional Financial Institutions
The biggest concern is that lawmakers do not fully understand the difference between DeFi and traditional finance. DEF argues that developers who write open-source code for decentralized protocols should not be placed on the same level as financial companies handling customer funds. The group urges the Senate to adopt four key principles to ensure adequate regulation.
State-level Regulation Issues
The issue of state-level law also creates problems. Currently, DeFi regulation varies from state to state, opening the door for large financial institutions to target projects by supporting stricter enforcement in states where it benefits them. DEF insists that federal law should override state rules for creating a clear and consistent national standard.
The Senate Banking Committee has welcomed DEF's feedback, but whether this will lead to real changes in the bill remains to be seen in the coming weeks. How the US handles DeFi regulation this year will shape the industry's future for years to come.
