From the IRS’s recently proposed tax rules for digital asset “brokers” to legislative efforts to combat illicit finance, policymakers are grappling with how to regulate decentralized networks, particularly when it comes to decentralized finance (“DeFi”).
While laws written for traditional finance presume a heavy reliance on centralized intermediaries, DeFi’s fundamental value proposition is that it reduces or eliminates the very need to rely on – or trust – a central intermediary (e.g., an FTX). As such, DeFi raises novel and unique challenges for Members of Congress and regulators.
In this piece, Rashan Colbert of dYdX explains DeFi and key concerns for policymakers to consider.
