Under the framework of US negotiations on a “cryptocurrency market structure” bill, Democratic senators proposed to include regulation of decentralized finance (DeFi), according to a document sent to Republicans leaked to the industry.
According to the document, anyone who designs, implements, operates, or benefits from DeFi interfaces that facilitate activities such as trading, storage, settlement, and lending is a digital asset intermediary. The Treasury Department, in conjunction with the SEC, CFTC, and Federal Reserve System, The parties that exercise control or influence over the decentralized finance platform must be specified.
Under this proposal, the SEC would establish rules on how to apply dealer requirements to front ends that provide access to securities, and the CFTC would issue parallel rules that would apply dealer framework requirements to front ends that provide access to digital products and derivatives.
However, he maintains that the Treasury Department will decide whether the protocol is sufficiently decentralized. In this regard, we clarify that creating or publishing open code is not a violation unless it implements, controls, or benefits from the protocol.
“Protocols that meet the criteria for decentralization are not intermediaries unless they have a front end or recurring revenue that resides in the US,” he elaborates.
In this sense, the proposed regulation proposed by the Ministry of Finance: DeFi protocols or frontends may be included in the “restricted list”. Similarly, they suggest that an annual report should be published assessing the risks associated with DeFi.
This approach aims to “establish a clear regulatory framework for decentralized financial platforms by defining accountability, clarifying oversight, and preventing abuse of decentralized protocols for illicit financing, evading sanctions, or circumventing market security barriers.”
initiative Arousing criticism among DeFi enthusiasts. “Senate Democrats are trying to destroy the structure of the market,” said attorney Jake Cherbinski. “They claim to be pro-cryptocurrency, but what they are essentially proposing is a ban on cryptocurrencies,” he added.
“The unfortunate proposal put forth by Senate Democrats would effectively ban the development of decentralized finance, e-wallets, and other applications in the United States, an outcome that is not feasible and inconsistent with American innovation.”
Summer Marsinger, Executive Director, Blockchain Association.
From Asociación Blockchain, a non-profit organization promoting the cryptocurrency industry. They urged lawmakers to stay at the negotiating table. And they will ensure that this bill, which they believe is important, supports and does not hinder America’s leadership in financial technology.
“Good policy does not punish decentralization. It protects consumers, sustains innovation and combats illicit finance where it actually takes place,” Zunera Mazar, director of the Digital Chamber, an association promoting the ecosystem, commented at the same time. In his opinion, the proposal is “clumsy, inefficient and risks pushing innovation overseas instead of addressing real risks”.
This situation could cause a setback in reaching bipartisan approval for the Cryptocurrency Market Structure Project, a law aimed at defining operating rules for digital assets that President Donald Trump hopes to sign this year, as reported by CriptoNoticias.
