US Senate publishes new draft law on the stricter regulation of the Defi sector: Effects on Ethereum and Uniswap

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The US Senate published a new draft law for the Defi sector on July 19, 2023. With this draft, the Senate intends to regulate the crypto range much more sharply and to introduce similar regulations to banks. This could affect crypto platforms such as Ethereum or Uniswap.

Defi platforms enable it to lend, lend or otherwise manage money via a blockchain, decentralized and without a middleman via smart contract. Despite the lack of a central authority, the Senate plans to treat defi platforms such as centralized banks.

The draft called Cryptoasset National Security Enhancement Act of 2023 aims to regulate defi protocols. Among other things, this would mean that the platforms would have to follow sharp money laundering guidelines. The platforms would then be obliged to collect user data, report suspected activities and to block sanctioned entities. Anonymous defi transactions would therefore become illegal. However, the question of which members of a protocol must implement these rules remains unclear.

Although there is no central authority behind most Defi protocols, the Senate plans to take investors responsible. According to the draft law, anyone who invests more than $ 25 million in the development of a defi protocol would be responsible for compliance with the rules.

The new law would affect numerous crypto projects and in particular decentralized crypto exchanges such as uniswap. Ethereum, the home of many defi protocols, could also suffer from the law. The difficulty of investments could prevent potential investors from investing in the Defi sector.

In addition, the defi area is popular with many members of the crypto community because it offers opportunities to protect privacy. However, the new law could deter existing and potential US users and complicate the development of privacy-oriented protocols.

However, the law still has to be approved by several instances and there are still open questions regarding the responsibility for the implementation of the required measures. Nevertheless, the law could make the development of numerous popular defi protocols more difficult, especially privacy protocols.