DeFi Education Fund
@fund_defi
Nonpartisan, nonprofit advocating for sound DeFi policy & to protect software developers.
DeFi Debrief:
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The @GLFOP now supports the Clarity Act!
Today's progress didn't happen by accident. It's the result of countless conversations, meaningful engagement, and real changes made to address law enforcement concerns while preserving innovation. Three titles, 25 provisions, numerous thoughtful conversations about how to address illicit finance. Thank you to the Senators, their staffs, and the White House for working together to move this forward.
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The claims made in this blog post are patently false. BPI claims that: “As drafted, the bill would exclude from AML/CFT obligations many DeFi actors who claim decentralization while still exercising meaningful control over, or deriving profits from, the protocol."
Sec. 301 of the Senate CLARITY Act addresses exactly this point; it defines "non-decentralized finance trading protocols" and explicitly brings those actors who exercise control over a protocol into the BSA's regulatory perimeter.
Anyone who actually read the bill could not make this critique in good faith.
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Introducing OPSeC: a new industry-wide initiative we're convening in partnership with @_SEAL_Org & @asymmetric_re to improve cybersecurity resilience across blockchain ecosystems & onchain software.
Join us to ensure security is at the heart of onchain technology development.
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NOW LIVE: MARKET STRUCTURE MARKUP RECAP
This week, the DEF team pulled together a 'Special Edition' of our weekly newsletter, DeFi Debrief. The Senate Banking Committee advanced Clarity Act, and we dig into the substance of the text, highlights, and what's to come. 👇
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The DEF team will be dropping a special edition of our weekly newsletter - DeFi Debrief - to recap this week's markup festivities.
Subscribe for free:
@SenLummis: “Chairman: In this bill, we've tried to use existing statutes and embed digital assets under them, whether it's the SEC the CFTC or criminal penalties, so the same conduct that the gentleman is trying to address is already chargeable today under 18 USC, 1956 and 1957, and existing sanctions laws. So, if somebody builds or uses software to launder criminal proceeds or evade sanctions, prosecutors can already bring cases under these statutes without needing a specific defi add on. So, if you carve out one thing for specific treatment, it sends a signal that DeFi software is not welcome in this country, and we don't want to send that signal. We want to use the existing structures and embed digital assets in the U.S."
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@SenLummis: “Chairman: In this bill, we've tried to use existing statutes and embed digital assets under them, whether it's the SEC the CFTC or criminal penalties, so the same conduct that the gentleman is trying to address is already chargeable today under 18 USC, 1956 and 1957, and existing sanctions laws. So, if somebody builds or uses software to launder criminal proceeds or evade sanctions, prosecutors can already bring cases under these statutes without needing a specific defi add on. So, if you carve out one thing for specific treatment, it sends a signal that DeFi software is not welcome in this country, and we don't want to send that signal. We want to use the existing structures and embed digital assets in the U.S."
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From the very beginning, the crypto industry was united in asking that market structure legislation deliver legal clarity and protection for software developers. Clarity Act Section 604 (the BRCA) and the developer protections in Section 601 are a manifestation of a foundational principle: there is no digital asset industry without appropriate protections for those building it.
As we head into this morning’s markup, we extend massive thanks to @SenatorTimScott, @SenLummis, @SenThomTillis, @BernieMoreno, @SenatorHagerty, @PatrickJWitt, and the unsung heroes—Congressional staff—for being true advocates of developers and innovation.
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Today, a coalition of 100+ signatories join DEF in sending a letter to Congress.
Software developer protections are a non-negotiable in digital asset market structure legislation. This critical issue unites us — crypto and tech builders, investors, and advocates.
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Honestly we should be calling these amendments:
1. anti-Freedom
2. anti-Competition
3. anti-Innovation
Because at its best, DeFi is freedom, competition and innovation.
That why the team @fund_defi works so hard. DeFi is not just an amorphous crypto term.
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Friendly reminder to contact your Senator before 10:30am ET *tomorrow* and urge them to protect software developers and DeFi 🤏
DEF is tracking anti-DeFi amendments.
Ahead of the Senate Banking Committee markup of the Clarity Act, Senators submit amendments to be considered and voted on. Importantly, not every amendment will be considered, which means we have a timely opportunity to urge Senators to oppose amendments that could harm DeFi technology, developers, and users.
Here are the amendments you should ask your Senators to oppose*:
➡️ Amendment #16#, Senator Cortez Masto. [Re-writes the BRCA to turn it from a shield to a sword against developers]
➡️ Amendment #17#. Senator Cortez Masto. [Strikes protections for non-controlling developers in Section 302]
➡️ Amendment #22#, Senator Cortez Masto. [Strikes protections for non-controlling developers in Section 301]
➡️ Amendment #24#, Senator Kim. [Expands the definition of a “financial institution” in 31 USC 5312 to include digital asset businesses]
➡️ Amendment #27#, Senator Kim. [Expands BSA/AML obligations and certification requirements for "covered businesses" to “prevent illicit finance” through decentralized financial services platforms]
➡️ Amendment #32#, Senator Van Hollen. [Expands application of criminal code to DeFi developers who publish, distribute, deploy, administer, or constitute code that “facilitates” crime or who act with “reckless disregard for a substantial risk” the DeFi trading protocol is used in connection with a violation of 1956, 1957, 1960, or 2339C]
➡️ Amendment #33#, Senator Van Hollen. [Prohibits publishing, distributing, deploying, or constituting a DeFi trading protocol “for the purpose of facilitating” a violation of 1956, 1957, 1960, or 2339C]
➡️ Amendment #67#, Senator Warren. “...would exempt certain software developers identified in the White House digital assets report and address vulnerabilities to protect national security”
➡️ Amendment #69#, Senator Warren. “...would define financial institutions under anti-money laundering law”
➡️ Amendment #70#, Senator Warren. “...would establish tailored anti-money laundering and countering the financing of terrorism responsibilities for certain DeFi front-ends”
➡️ Amendment #71#, Senator Warren. “...would establish tailored anti-money laundering and countering the financing of terrorism responsibilities for certain DeFi businesses”
➡️ Amendment #72#, Senator Warren. “...would establish tailored anti-money laundering and countering the financing of terrorism responsibilities for certain DeFi businesses”
➡️ Amendment #73#, Senator Warren. “...would close the tokenization loopholes”
➡️ Amendment #89#, Senator Reed. [Direct attack on Van Loon - 5th Circuit federal court decision - by subjecting smart contracts to sanctions “without regard to whether such contracts operate autonomously, can be modified, or are owned”]
➡️ Amendment #92#, Senator Reed. [Expands the application of the BSA by broadening the definition of "financial institution" to include digital asset companies and developers]
➡️ Amendment #94#, Senator Reed. [Eliminates BRCA from Clarity Act]
*The amendment text is not yet public. Bracketed language is DEF’s description based on text the DEF team reviewed; language in quotes is the Senators’ original description, which suggests a threat to DeFi.
The DEF team will keep track of these amendments during Thursday’s markup, and will share updates on X. Stay tuned!
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The following statement is attributed to @blockchainassn CEO @SummerMersinger & @crypto_council CEO @_JiKim in response to law enforcement concerns about the Clarity Act:
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News: Law enforcement groups are continuing to raise concerns about the crypto market structure bill ahead of a markup tomorrow
Read letters from the National Association of Assistant U.S. Attorneys and the National Sheriffs’ Association on @POLITICOPro
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DEF is tracking anti-DeFi amendments.
Ahead of the Senate Banking Committee markup of the Clarity Act, Senators submit amendments to be considered and voted on. Importantly, not every amendment will be considered, which means we have a timely opportunity to urge Senators to oppose amendments that could harm DeFi technology, developers, and users.
Here are the amendments you should ask your Senators to oppose*:
➡️ Amendment #16#, Senator Cortez Masto. [Re-writes the BRCA to turn it from a shield to a sword against developers]
➡️ Amendment #17#. Senator Cortez Masto. [Strikes protections for non-controlling developers in Section 302]
➡️ Amendment #22#, Senator Cortez Masto. [Strikes protections for non-controlling developers in Section 301]
➡️ Amendment #24#, Senator Kim. [Expands the definition of a “financial institution” in 31 USC 5312 to include digital asset businesses]
➡️ Amendment #27#, Senator Kim. [Expands BSA/AML obligations and certification requirements for "covered businesses" to “prevent illicit finance” through decentralized financial services platforms]
➡️ Amendment #32#, Senator Van Hollen. [Expands application of criminal code to DeFi developers who publish, distribute, deploy, administer, or constitute code that “facilitates” crime or who act with “reckless disregard for a substantial risk” the DeFi trading protocol is used in connection with a violation of 1956, 1957, 1960, or 2339C]
➡️ Amendment #33#, Senator Van Hollen. [Prohibits publishing, distributing, deploying, or constituting a DeFi trading protocol “for the purpose of facilitating” a violation of 1956, 1957, 1960, or 2339C]
➡️ Amendment #67#, Senator Warren. “...would exempt certain software developers identified in the White House digital assets report and address vulnerabilities to protect national security”
➡️ Amendment #69#, Senator Warren. “...would define financial institutions under anti-money laundering law”
➡️ Amendment #70#, Senator Warren. “...would establish tailored anti-money laundering and countering the financing of terrorism responsibilities for certain DeFi front-ends”
➡️ Amendment #71#, Senator Warren. “...would establish tailored anti-money laundering and countering the financing of terrorism responsibilities for certain DeFi businesses”
➡️ Amendment #72#, Senator Warren. “...would establish tailored anti-money laundering and countering the financing of terrorism responsibilities for certain DeFi businesses”
➡️ Amendment #73#, Senator Warren. “...would close the tokenization loopholes”
➡️ Amendment #89#, Senator Reed. [Direct attack on Van Loon - 5th Circuit federal court decision - by subjecting smart contracts to sanctions “without regard to whether such contracts operate autonomously, can be modified, or are owned”]
➡️ Amendment #92#, Senator Reed. [Expands the application of the BSA by broadening the definition of "financial institution" to include digital asset companies and developers]
➡️ Amendment #94#, Senator Reed. [Eliminates BRCA from Clarity Act]
*The amendment text is not yet public. Bracketed language is DEF’s description based on text the DEF team reviewed; language in quotes is the Senators’ original description, which suggests a threat to DeFi.
The DEF team will keep track of these amendments during Thursday’s markup, and will share updates on X. Stay tuned!
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STRONG staff statement from the SEC today laying out that “covered user interfaces” *do not* need to register as a broker-dealer when UIs—including self-custody wallet interfaces—display quotes and execution routes to the user, “selects one or more default trading venues,” charges a fixed fee based on objective factors, and other circumstances listed.
The DEF team is grateful to the SEC Crypto Task Force for this much-needed guidance, and for engaging with digital asset industry participants as they develop regulatory frameworks that enable and incentivize innovation.
We look forward to continued collaborations with the SEC, as we are hopeful this staff guidance can be codified into a durable rule or law.
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Today, a coalition of 100+ signatories join DEF in sending a letter to Congress.
Software developer protections are a non-negotiable in digital asset market structure legislation. This critical issue unites us — crypto and tech builders, investors, and advocates.
Show more
