Congress and regulators are taking a hard stance on crypto regulations after the FTX collapse.
Senator Elizabeth Warren introduced an anti-money laundering bill that would essentially kill the utility of blockchains and defi. You can read about one organization’s objections here:
Senator Sherrod Brown wishes he could ban crypto entirely in the U.S:
Both views pose huge risks to the entire crypto and Defi ecosystem and I can’t shake the thought of impending doom on this space.
Luckily there are a few major factors that are working in the industry’s favor:
– Crypto friendly lawmakers who are good at explaining to the rest of congress the difference between a centralized exchange like FTX and DeFi. Like Senator Patt Toomey.
– This multi-billion dollar industry has a lot of powerful lobbyists helping stop harmful regulation.
– Congress rarely passes anything these days. In divided government crypto regulations are unlikely.
But you never know.
So I worry that one day, perhaps 6 months from now or a year or 2 years, people won’t be able to start innovative DeFi projects like they used to and only the very rich will be able to afford to meet the regulations required to start one.
If that’s where DeFi is headed it will be the death of most cryptocurrencies.
True defi cannot be regulated. Once a smart contract is deployed it is out there.
The front end ui that interacts with the smart contract can be regulated if its hosted in the country trying to regulate but then solutions like ifps can host decentralised front ends. Or you can interact directly with the smart contract.
The point of decentralised is that as long as the chain exists the services exist. There isn’t really an option to put crypto back in the box short of everyone losing faith and turning of their nodes.
I doubt it. As others have said, the vast majority of the world isn’t the US. And for every regulatory threat that comes along, another use case for DeFi emerges.
Nah, decentralization will be free, always. You can’t regulate something where the parties can act without compromising their info. Avalanche and Cosmos are examples of this. Don’t let FTX affect you, literally that’s a Cex
It’s probably worth remembering that the vast majority of the world isn’t the USA. Even if all the strictest regulations are brought in by the US government, it would only stop their citizens, the rest of us would happily carry on.
They sanctioned TornadoCash but it still gets used plenty every day. China banned bitcoin mining but it clearly still goes on in other countries.
As far as EU goes, I believe they are trying to regulate crypto in a way that it makes it a trustworthy tool equal to regular banking, so that the insitutions can start using it. That sucks if you are a crypto-anarchist, but would be great for mass adoption.
I always imagine my backward ass country skipping decades of on premise vendor type of digitalization straight to crypto in order to streamline its services. How cool would it be if DAOs were considered regular legal entities. All the hassle with reporting ownership structure to courts would be gone. This is a big opportunity for governments and they are not dumb enough to miss it.
>essentially kill the utility of blockchains and defi.
I don’t think so.
Maybe for centralized exchanges, well, they might have power over those. But decentralized defi, maybe not. I’ll still lay lowkey, still doing my staking mostly on platforms like Beefy finance, Dafi protocol, etc.
Web3 itself has to do with anonymity. I do not still see how they will be regulated. Well, let’s see.
How come a truly decentralised project with a smart contract up and running audited secured ever be centralized never ever…that’s the beauty i think
Nope, worst case it moves to TOR
Out of existence no… Out of reach for the average person, possibly. I can’t think of any law that would physically stop them from functioning but they could regulate any usd off ramps to not allow defi coins.
I’ve noticed this past year not a single exchanc I use that doesn’t provide offramps in the USA have and problems due to regulation. Even services like tornado.cash still function fine the government just seized the domain name, the contract is still live and well
It’s really hard to regulate considering the decentralized nature of DeFi but I do expect governments to intervene at some point. No one is going to let you make money for free in perpetuity. Not on this planet at least.
The biggest threat to defi was sbf. He’s an evil fuck that had the ability to kill defi. Sbf is gone and morons like Warren don’t even know where to start when it comes to regulating crypto, let alone defi.
As long as little pussy farts like you are scared of big bad regulation, they will continue to scare about it. Stop it
No. But centralized projects are.
The danger is not just the damage today, but it brings us to the edge of what can be much worse. What if OFAC adds DeFi stuff and I can’t repay my loan in time?
The truth is that “regularization” would be something that I would never like to see in the cryptographic market, at first many of us used, bought, and sold cryptocurrencies because we were fed up with banks and regularizations, also called “centralization” of them. We had never been so much in ownership of our money until crypto came along, but this is only possible as long as it stays decentralized, so I hope it stays that way.
No I don’t think it would be regulated up to the point of inexistence, but the access of this from CeFi to DeFi will surely be harder. I do hope that they won’t overregulate this. I’ll be waiting for the government’s next move while I look at Polygen’s first Genesis NFT campaign with Galxe.
Naw. But it’s dead anyway. After this SBF and Luna shit this asset class is cooked.
First of all, if your in the US, you need to vote these people out of office. Second they can try to ban it but if they operate outside of the US, then they can’t shut it down completely. Third, once these dinosaurs leave office, defi will make a return if they do manage to ban it.
I would not be surprised if they will try to force KYC even just to hold a wallet.
Metamask has already started tracking IPs on transactions on their default rpc.
Then from wanting to do that on HOW and IF they will manage to it’s a different story.
Though we used to say that about the Internet ans yet they managed to censor it wuite heavily so we’ll see
Sounds like a very US-centric take. Look at the UK, Malta, or Singapore with their much more crypto-friendly legislation. Crypto is global because the internet is global. Any industry like that can exist even if a major player like the US bans it.
If it can be regulated then it wouldn’t be DeFi, we shouldn’t be alarmed by these rumors
Just get rid of centralized exchanges. Crypto was never meant to be centralized. Plus we need better smart contracts and better exception handling.
I missed the part where the article explains how to shut off a smart contract
DeFi has been a reliable source of passive income for many investors. However, it’s possible that the government may not be pleased with the decentralization of financial power away from traditional banks. To protect users’ transactions and DeFi activities from government surveillance and other unwanted scrutiny, it is necessary to incorporate privacy measures into DeFi protocols. This will ensure that users can conduct their activities anonymously and without fear of having their transactions monitored.
I saw an article saying that regulation could actually be a blessing in disguise. As it would grant a level of trustworthiness to crypto in general. Bigger corporations would enter, and crypto would become a means of payment even faster. So, I guess you could use the opportunity to stack coins like BNB or XPRESS or COTI. This might be their time.