• A bipartisan group of lawmakers has proposed new rules to regulate DeFi.
• The proposed bill has received significant criticism from the crypto community.
• Regulations have become a hot topic in crypto in the last few years to ensure investor protection, uphold international laws, and foster innovation.
Proposed Rules for Regulating Decentralized Finance
A bipartisan group of lawmakers has proposed new rules to regulate decentralized finance (DeFi). The proposed bill seeks to bring DeFi into compliance with anti-money laundering (AML) regulations by holding platforms, like decentralized exchanges and wallet providers, accountable for breaches of AML and sanctions rules on their platforms. Additionally, anyone who invests more than $25 million in developing a protocol may be held responsible if it is not clear who controls the protocol.
Criticism From Crypto Community
The proposed bill has received significant pushback from the crypto community due to its stringent requirements. ConsenSys lawyer Bill Hughes likened it to a “de facto ban” due to its impracticality. He further warned that malicious actors could use such bills as leverage in order to get enough support for them to pass into law.
Balancing Investor Protection and Innovation
Regulations have become an increasingly important issue in the crypto industry as its staying power and growth become more evident. Governments are trying to strike a balance between investor protection, upholding international laws, and fostering innovation when they create regulations for this sector.
CANSEE Act: Proposed by Lawmakers
The Crypto-Asset National Security Enhancement and Enforcement (CANSEE) Act was recently proposed by a cross-section of bipartisan lawmakers in the United States on Wednesday 19th July 2021 as part of efforts to rein in the fast-growing industry. It seeks to ensure that DeFi complies with AML regulations while also placing obligations on those who invest heavily into developing protocols when it is not clear who controls them.
Conclusion
The CANSEE Act has caused anxiety among members of the crypto community due its strict requirements that are seen as going against fostering innovation within this sector while still ensuring investor protection measures are respected internationally
