Regulatory Task Force Announcement

The DeFi Alliance is excited to announce the launch of a regulatory task force composed of leaders from across the crypto industry.

Since the DeFi Alliance launched in April 2020, we’ve been helping to provide entrepreneurs and startups with the support and guidance they need to launch successful DeFi protocols fit for use by the world’s largest trading firms. In that time, DeFi has exploded in popularity, emerging as one of the most promising sectors within the crypto industry.

The ultimate vision for DeFi is to create programmable financial infrastructure enabling a broad range of economic activities without the need to rely on trusted third parties. So far, DeFi developers have designed and launched innovative, intermediary-free protocols allowing users to exchange assets, create stablecoins, earn interest, trade derivatives, insure against losses, and more. These protocols form the foundation of a new financial system for the digital era.

As DeFi gains broader adoption, it raises novel questions about how traditional regulations apply in the context of decentralized protocols.

The legacy finance industry is subject to a wide array of regulatory compliance obligations that seek to achieve important goals like protecting investors, maintaining fair and efficient markets, and defending against illicit activity. Most regulations work by requiring intermediaries like banks and exchanges to make sure that the rules are followed.

How do those regulations apply if there are no intermediaries? Who is responsible for ensuring compliance? What can market participants do to protect the integrity of this new system?

We believe it’s critical for DeFi entrepreneurs and companies to proactively address these core questions, as well as many others. DeFi won’t succeed at scale unless investors, trading firms, and financial institutions can use it without fear of adverse legal consequences, and that requires earning the support, trust and approval of policymakers worldwide.

Our regulatory task force brings together leaders from every corner of the crypto industry, including DeFi entrepreneurs and engineers, in-house counsel at DeFi startups and trading firms, auditors from the Big Four accounting firms, and attorneys in private practice. The task force will be led by Colleen Sullivan, Chief Executive Officer of CMT Digital, and Jake Chervinsky, General Counsel of Compound Labs.

The task force’s primary goals are: to educate DeFi Alliance cohort members on how to account for compliance during the design process; to develop guidelines addressing self-regulatory best practices for DeFi development; and to advocate for good policies that recognize the unique and significant benefits of decentralized financial infrastructure.

We look forward to working on these important issues and helping to bring regulatory certainty to the exciting and innovative DeFi space!

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