In the US, they will take up the regulation of DeFi
Date: 2023-07-20 Author: Karina Ziganova Categories: IN WORLD
The U.S. Senate has introduced a new bill that would impose stringent anti-money laundering (AML) requirements for decentralized finance (DeFi) protocols.
A bill called the Crypto-Asset National Security Enhancement Act of 2023 requires DeFi platforms to introduce banking controls over the user base. The document states that the initiative was created with the aim of combating the rise in crypto-related crime and blocking opportunities for money laundering evasion and sanctions measures that are critical to national security.
Developers of DeFi protocols were in the crosshairs of the regulator
DeFi protocols are much more difficult to regulate than traditional centralized exchanges. However, the bill proposes to circumvent this problem by imposing KYC and AML compliance requirements on platform developers. The document notes that "if no one controls the DeFi protocol, then as a safety net, anyone who invests more than $25 million in development will be liable for these obligations."
Regulatory organizations will have to verify and collect customer information, support anti-money laundering programs, report suspicious activity to the government, and block the use of the protocol by sanctioned individuals.
In addition, the bill provides for the expansion of the powers of the US Treasury Department to police check alleged AML violators in non-traditional financial systems, including cryptocurrencies.
SEC plans to oblige DeFi platforms to register
Earlier, the US Securities and Exchange Commission also announced its intention to tighten regulation on DeFi platforms. The SEC plans to amend existing rules to force protocols to undergo mandatory registration as exchanges or brokers.
According to Commission Chairman Gary Gensler, many DeFi platforms already fall under the current definition of an exchange and are required to comply with securities laws. He also argues that participants in the cryptocurrency market have the right to receive the same protection as those who invest in traditional financial instruments.
Curiously, the SEC does not offer the exact wording of DeFi in the regulation. Gensler and his allies believe the technology behind the platforms is not so important. Many key industry players have already accused him of lacking clarity and overstepping reasonable boundaries in an attempt to expand the regulator's powers.
