The Blockchain Association Criticizes Proposed US DeFi Legislation

The Blockchain Association, a non-profit organization advocating for innovation in the Web3 economy, has condemned the recent proposal of the Enhancing the National Security of Crypto Assets Act of 2023. This bipartisan bill, introduced by Senator Jack Reed and co-sponsored by Mike Rounds, Mitt Romney, and Mark Warner, aims to impose strict anti-money laundering rules on decentralized finance (DeFi) protocols.

Concerns About the Legislation

The Blockchain Association argues that this legislation is not suitable for decentralized finance and may hinder its growth. The organization points out that fraudulent transactions in the cryptocurrency sector are relatively small compared to traditional finance. They believe that federal law enforcement agencies already possess the necessary resources and expertise to address cryptocurrency-related crimes, making the proposed bill redundant.

Impact on the Crypto Industry

Despite the increasing adoption of digital assets by US residents, the regulatory environment for cryptocurrencies remains challenging. The Securities and Exchange Commission (SEC), led by Gary Gensler, has called for increased funding from the government to support its regulatory efforts. However, some lawmakers, like Senator Kennedy Jr., have raised concerns about the SEC’s authority and competence in handling crypto-related fraud.

Conclusion

The proposed US DeFi legislation has received criticism from the Blockchain Association for being impractical and not aligned with the nature of decentralized finance. As the debate around crypto regulation continues, industry participants and regulators need to find a balance that ensures consumer protection without stifling innovation in the Web3 economy.