SEC Chairman Atkins’ Vanderbilt Digital Assets Summit Remarks; New U.S. Treasury Rule Proposal; Alabama and West Virginia Advance DUNA Statutes; and more.

DEF Responds to SEC Crypto Task Force: Distinguishing DeFi from Exchanges

On April 1, 2026, DEF submitted a letter to the Securities and Exchange Commission (SEC) Crypto Task Force responding to Commissioner Hester Peirce’s December 2025 Request for Information (RFI) on how the SEC should approach crypto assets trading on national securities exchanges and alternative trading systems.

In the letter, DEF emphasized that the SEC should not misclassify DeFi technology and developers as exchanges when neither are actually performing exchange functions. Specifically, the letter calls on the SEC to adopt a functional test for an exchange “facility” so that only those actually performing exchange functions are in scope, and not disintermediated software, automated market makers (AMMs), smart contracts, or developers. The letter further urges the SEC to avoid treating developers as a “group of persons” subject to exchange regulation, except in cases where a developer both provides a product that performs an exchange function and acts in concert with an existing exchange or other party to carry out that function. Where there is no shared intent or control over exchange functions, developers should not be treated as an exchange just because their software is used by one.

Read the full letter here.

SEC Chairman Atkins’ Vanderbilt Digital Assets Summit Remarks

On April 6, 2026, SEC Chair Paul Atkins participated in a fireside chat at the Digital Asset Summit in Nashville, Tennessee, hosted by Vanderbilt University Law School and the Blockchain Association.

The discussion focused on advancing regulatory clarity for digital assets, including a forthcoming “Reg Crypto” framework under the Securities Act of 1933 to regulate token fundraising. Chair Atkins also highlighted the challenges of applying existing securities laws to decentralized systems and previewed a new approach under the Securities Exchange Act of 1934, including an “innovation exemption” aimed at enabling DeFi experimentation within a defined regulatory framework.

Click here to watch the full fireside chat.

U.S. Treasury Rule Proposal: Implementing GENIUS Act’s Requirements to Counter Illicit Finance

On April 8, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) issued a joint proposed rule to implement provisions of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The proposed rule would classify permitted payment stablecoin issuers (PPSI’s) as “financial institutions” under the Bank Secrecy Act (BSA), and not “money services business.”

As directed by the GENIUS Act, the proposal requires PPSI’s to establish and maintain an anti-money laundering/counter financing of terrorism (AML/CFT) program, report suspicious financial activity, and implement effective sanctions compliance programs. It also mandates that PPSI’s maintain the technical capabilities, policies, and procedures necessary to block, freeze, or reject illicit transactions and comply with lawful orders.

Notably, the rulemaking establishes definitions for a “primary market” and a “secondary market,” assigning obligations to PPSIs in each. The rule defines “secondary market” as “payment stablecoin activity that does not directly involve the PPSI as a party to the transaction other than via a smart contract” (p. 13) and further proposes secondary market obligations for PPSIs (p. 36). This framework suggests that DeFi platforms and peer-to-peer (P2P) exchanges could be included within secondary markets, but does not appear to put obligations on actors other than PPSIs. Importantly, issuers will not be required to file Suspicious Activity Reports (SARs) for activity occurring in the secondary market.

Read the proposed rule here.

FinCEN Proposes Rule: Modernizing Bank Secrecy Act Implementation

Earlier in the week, FinCEN announced a proposed rule to “fundamentally reform” AML/CFT programs in an effort to modernize the BSA. The proposed rule would (i) provide greater flexibility and discretion for lower-risk reporting to reduce unnecessary regulatory burden, (ii) require regulators to consult with FinCEN prior to AML/CFT enforcement actions, and (iii) set standards for AML/CFT program effectiveness in combatting and preventing illicit activity. There will be a 60-day public comment period for the proposal once published in the Federal Register. A summary of the key changes in FinCEN’s proposed rule is available here.

As DEF has written previously, the BSA is largely ineffective and burdensome. Despite imposing significant compliance costs, the BSA has demonstrated minimal success in proactively detecting and preventing financial crimes. It is encouraging to see FinCEN and the Treasury Department take steps to modernize and refine the financial integrity regime.

Read the full proposal here.

Alabama and West Virginia Advance DUNA Statutes

On April 2 and April 5, 2026, Alabama and West Virginia advanced versions of the Decentralized Unincorporated Nonprofit Association (DUNA) Act, marking a significant step for decentralized autonomous organizations (DAOs) in the United States. While West Virginia’s bill awaits the Governor’s signature, Alabama Governor Kay Ivey has signed the state’s bill into law. These states are the second and third to adopt such legislation, following Wyoming, which enacted its DUNA law in 2024.

As a reminder, DAOs are blockchain-based entities governed by token holders, with decisions made through on-chain voting rather than traditional management structures. These new laws grant DAOs formal legal status and limited liability protections, addressing a long-standing gap in how decentralized organizations are treated under existing legal frameworks. By establishing a recognized entity structure, DUNA statutes allow DAOs to own property, enter contracts, and interact more easily with traditional institutions.

The adoption of DUNA frameworks at the state level signals growing momentum toward legal clarity for decentralized governance and may help inform future federal approaches to regulating DeFi and blockchain-based organizations.

Bank of Canada Releases New DeFi Lending Report

On April 2, 2026, the Bank of Canada published a staff analytical paper entitled “DeFi Lending: Returns, Leverage, and Liquidation Risk.” The paper examines transaction data from Aave V3, the largest DeFi lending protocol, to assess the potential benefits and risks of decentralized lending in practice. Specifically, the paper (i) evaluates Aave’s revenue model, (ii) investigates recursive leverage behavior among borrowers, and (iii) analyzes liquidation patterns.

Notably, the paper finds that DeFi lending “is viable in a technical and operational sense” and that Aave V3 “operates continuously, transparently, and with minimal overhead, demonstrating the potential of protocol-based credit markets” (p. 28).

Notable and Quotable

“Similarly, the software-developer protections that Clarity incorporates would ensure that the technology powering digital finance remains open, secure and domestically developed. American corporations and entrepreneurs poised to engineer the industry’s underlying infrastructure must understand their legal obligations. Clarity would deliver long-sought confidence and gives the next generation a green light to build.”

— Treasury Secretary Scott Bessent in an op-ed for the Wall Street Journal

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