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DEF August Recap

DEF’s August Recap


Here’s what the DeFi Education Fund (DEF) has been up to in August. If you have any questions or would like to learn more about a specific activity, please do not hesitate to reach out at contact@defieducationfund.org.


Coinbase Amicus Brief

On August 11th, DEF filed an amicus brief in the U.S. District Court for the Southern District of New York in support of Coinbase’s motion for judgment on the pleadings against the Securities and Exchange Commission (SEC).


The purpose of an amicus brief is to educate the court and supplement the party’s arguments, so we chose to focus on two issues that are key to DeFi and software developers more generally: the SEC’s allegations concerning Coinbase’s wallet application (“Wallet”) and its staking service.


On the Wallet front, we argue that in order to be a broker, a person or entity must “effect” transactions in securities on behalf of others—i.e., they must act as an intermediary. Coinbase’s development and provision of Wallet does not satisfy this definition because a wallet application is merely passive software. Coinbase does not control users’ assets, handle customer funds, or commingle assets through Wallet as private keys are stored directly on users’ devices and not with Coinbase (or any third party).


And on the staking program, we assert that Coinbase is not selling unregistered securities because its role in this program is purely ministerial and akin to an IT service provider.


For more information on our amicus brief, check out our thread on the matter.


Defending Privacy in Wake of Tornado Cash Indictments

On August 23, the US Department of Justice (DOJ), Southern District of New York, charged Tornado Cash (TC) developers Roman Storm and Roman Semenov with conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business, and conspiracy to violate the International Emergency Economic Powers Act (IEEPA). While the indictment alleges serious crimes, it is important to remember that an indictment is simply unproven allegations.


Responding to the news, DEF’s CEO and CLO expressed their concerns in an op-ed in CoinDesk titled “When Did Privacy Become a Bad Word?” In their piece, Miller Whitehouse-Levine and Amanda Tuminelli write about the clash between liberty and security heightened by technology noting:


“The privacy debate is decades old. There will always be an inherent tension in balancing the individual’s right to privacy with the government’s legitimate need to cabin privacy rights in certain circumstances to prevent crime or serve an important government interest. What seems to have been lost along the way is a mutual respect and benefit of the doubt between the government and citizens.”


You can read the full op-ed here as well as listen to Amanda Tuminelli’s appearance on Laura Shin’s Unchained Podcast in which she discusses the indictment.


Media


Op-Eds




Print/Online

  • Bloomberg: Treasury Aims to Snag Tax Cheats With Crypto Broker Proposal

    • “Today’s proposal from the IRS is confusing, self-refuting, and misguided,” said Miller Whitehouse-Levine, chief executive officer of the DeFi Education Fund. “It attempts to apply regulatory frameworks predicated on the existence of intermediaries where they don’t exist, an ‘unsquarable’ circle that the proposal itself acknowledges.”


  • The Wall Street Journal: U.S. Tackles Crypto Tax Mess

    • “Today’s proposal from the IRS is confusing, self-refuting, and misguided,” said Miller Whitehouse-Levine, head of the DeFi Education Fund, which advocates on behalf of platforms such as Uniswap. “It attempts to apply regulatory frameworks predicated on the existence of intermediaries where they don’t exist.”


  • Reuters: Biden administration unveils new crypto tax reporting rules

    • Miller Whitehouse-Levine, CEO of the DeFi Education Fund, a lobbying group focused on decentralized finance, said the proposed approach would neither make filing taxes easier nor improve tax compliance…"Today's proposal from the IRS is confusing, self-refuting, and misguided. It attempts to apply regulatory frameworks predicated on the existence of intermediaries where they don't exist," he said in a statement.


  • CoinDesk: Sweeping U.S. Tax Proposal Met With Boos From Crypto World

    • Miller Whitehouse-Levine, the CEO of a decentralized finance (DeFi) lobbying group, said on the social media platform that the proposal as written is “overbroad,” with provisions allowing it to capture all sorts of entities. He pointed to self-hosted, or unhosted, wallets as one example…“While acknowledging [that self-hosted wallet users ‘effectuate’ their own transfers], the proposal still somehow attempts to find third-parties [sic] ‘responsible for effectuating transfers on behalf of’ a wallet user,” he said. “In order to square the circle, the proposal asks one to accept that ‘effectuating’ doesn’t mean effectuating.”


  • Blockworks: Clarity or confusion? Crypto tax proposal earns mixed reactions

    • Miller Whitehouse-Levine, CEO of the DeFi Education fund called Friday’s release “a confusing and self-refuting proposal…As feared, it strains to find non-existent financial intermediaries in crypto — including DAOs and certain wallet providers — or to create them,” Whitehouse-Levine added.


  • The Block: Treasury, IRS release proposed crypto tax reporting rules

    • "It attempts to apply regulatory frameworks predicated on the existence of intermediaries where they don't exist, an 'unsquarable' circle that the proposal itself acknowledges," said the organization's CEO Miller Whitehouse-Levine. "This approach won’t make filing taxes easier nor improve tax compliance, and we look forward to providing our comments as to why this proposal must be reconsidered.”


  • CoinDesk: U.S. Senator Lummis, Crypto Lobbyists Urge Court to Dismiss SEC's Coinbase Lawsuit

    • In total, lobby organizations including the Blockchain Association, Crypto Council for Innovation, Chamber of Digital Commerce, DeFi Education Fund, Chamber of Progress, Consumer Technology Association, venture firms like Andreessen Horowitz and Paradigm and half a dozen academics filed a total of six briefs, not including the Senator’s.



  • Capitol Account: BlackRock, Fidelity and Vanguard Pan FSOC's Push to Label More Firms Too-Big-to-Fail

    • The crypto industry, however, would like some answers. Today, the DeFi Education Fund took the unusual step of filing a public records request with the agency to “get to the bottom” of the commission’s decision not to file a brief in the case, Kirschner v. JPMorgan Chase. While tokens aren’t syndicated loans, of course, there is a similar outstanding question about whether they are securities. Gensler thinks they are, much to the dismay of digital asset firms. So there are some parallels.


Podcasts

  • The Unchained Podcast: Is This the End of DeFi? Why the US Government Is Going After Tornado Cash

    • On Wednesday, the U.S. Government indicted Tornado Cash developers Roman Storm and Roman Semenov for three counts of conspiracy involving a staggeringly large number: $1 billion in criminal proceeds. The U.S. Department of Justice attached North Korean hackers to a large portion of this sum, alleging that Tornado’s privacy tech enabled nefarious deeds. Amanda Tuminelli, chief legal officer of the DeFi Education Fund, joins the show to assess whether the U.S. Government got it right or is merely misguided in its understanding of how blockchain technology works. Should Tornado Cash devs be held to account for the criminal use of their software?


For up-to-date information about what’s happening in D.C. and what we are up to, please follow us on Twitter @fund_defi and subscribe to our Substack.



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