Aug 11, 2021
Tucked away in the infrastructure bill before congress is a 'pay-for' provision that claims it will raise $28 billion in new revenue from the cryptocurrency industry by requiring brokers to provide information on their users. To be sure, traditional exchanges and brokers such as Gemini, Coinbase and others should be regulated and comply with any new tax laws approved by congress. However, as originally written, the provision would have potentially included virtually every kind of participant in the industry, from miners to software developers, lightning nodes (Bitcoin) and others. If passed in its original form, it would have a chilling effect on innovation in DeFi, and throw the whole industry into a state of confusion and uncertainty.
This is a pivotal moment in this trajectory of digital assets, DeFi and blockchain. At the time of recording, there is a compromise amendment that would clarify these rules and would exempt many of those non-broker entities, still no vote has been cast one way or the other and anything could happen.
Regardless of a positive outcome, this is no way to make policy and the whole event should serve as a cautionary tale in future debates on this issue. The fight itself reveals a fundamental misunderstanding of how DeFi works. Governments are used to traditional custodial financial intermediaries, but DeFi is non-custodial. Regulators are used to overseeing companies and individuals whereas DeFi is built on clever code and math. By failing to understand how the technology works, governments could inadvertently de-rail one of the fastest growing and most promising sectors in the economy today.
On this episode of DeFi decoded, Andrew and Alex will dig into this topic, discussing how we got here, what's at stake and what the future holds. You won't want to miss it!