Decentralized finance defenders argued against imposing stringent anti-innovation rules on the fledgling digital asset industry.
At a U.S. House Finance Services Committee hearing titled “Decoding DeFi: Breaking Down the Future of Decentralized Finance,” a roster of DeFi proponents testified to protect the sector from stricter rules focused on anti-money laundering and introducing total surveillance on web3 users.
Crypto skeptics like Representative Bill Foster and other Democratic Congress members claimed DeFi developers should be held liable for criminal uses of blockchain technology.
Rep. Foster and other anti-DeFi legislators reiterated proposals to tighten the regulatory noose around crypto activity. Specifically, Committee members highlighted the Treasury as the best agency to enforce stricter AML rules and crack down on blockchain code writers.
U.S. Representatives also questioned blockchain’s alleged use as a tax evasion tool. Coin Center research director Peter Van Valkenburgh staunchly opposed this assertion.
This is the correct position and it's really embarrassing and an unforced error how many liberals/center left people have embraced copaganda to the point of dismissing payments anonymity as something bad/pro-crypto coded rather than the obvious defense of civil liberties it is https://t.co/mvsqmMMsgs
— Rohan Grey (@rohangrey) September 10, 2024
Van Valkenburgh argued that evading regulators using a public, transparent, decentralized ledger, known as a blockchain network, was difficult since anyone could inspect the transactions. Additionally, lawmakers in the so-called crypto caucus echoed Van Valkenburgh’s point, noting that criminals were more likely to use legacy financial systems to ferry billions to trillions in illicit wealth.
DeFi conversation intensifies
Since crypto’s inception, U.S. policymakers have generally regarded the Web3 complex as a Wild West rife with fraud. Still, the conversation around DeFi has gained traction in Congress and with some of the biggest financial names, like BlackRock. Proponents suggested that political headwinds have shifted in favor of crypto.
Coinbase CLO Paul Grewal said U.S. citizens would elect a pro-crypto Senate, regardless of who wins the presidential elections.
Bitcoin (BTC) and blockchain have also been hot topics in the race between Republican candidate Donald Trump and Democratic pick Kamala Harris. Former President Trump has promised to support the industry and established America as the world’s cryptocurrency capital. However, doubts exist over Trump’s ability to execute and actual concern over the industry.
Similarly, the industry has a complicated relationship with Harris’ potential regime. The incumbent Vice President has accepted crypto donations via Coinbase and reportedly engaged with industry leaders, but Harris’ stance and crypto policy approach leave much room for speculation.
Yet, crypto bigwigs like Ripple co-founder Chris Larsen have endorsed Harris for President.