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DEF’s April Recap
Here’s what the DeFi Education Fund (DEF) has been up to in April. If you have any questions or would like to learn more about a specific activity, please do not hesitate to reach out.
Amicus Briefs
In April, alongside peer organizations, we filed amicus briefs in two separate legal matters:
Tornado Cash
On April 12, alongside the Blockchain Association, we filed an amicus brief in support of the plaintiff’s motion for summary judgment in the Tornado Cash suit.
In the brief, we argue that OFAC’s sanctioning of Tornado Cash reflected “a basic misunderstanding of what Tornado Cash is and how it works,” and that the decision “is both unprecedented and unlawful” under the APA.
Among other points, we argue that OFAC exceeded its authority in sanctioning software, which is neither “property” nor a “person.”
As we have noted previously, the downstream implications of sanctioning a software protocol will lead to not only a weakening of the digital asset industry, but will also seriously jeopardize law-abiding Americans’ financial privacy.
CFTC v. Ooki DAO
On April 21, alongside Paradigm, A16z, LeXpunK we filed an additional amicus brief in the CFTC v. Ooki DAO litigation.
In our new brief, we ask that “any default judgment the Court enters be a narrow one” that does not bind any current or former individual token holders.
We argue that the Court needs to “make clear that any default judgment it enters in this proceeding will run against only the “Ooki DAO” and assets in the Ooki DAO’s treasury, rather than against any individuals or their personal assets.”
As a refresher, please take a look at our initial brief.
We look forward to continuing to work with our partners on this matter and will keep the community updated as the litigation progresses.
Letter to IL Policymakers
On April 25, we sent a letter to Legislators in Illinois expressing our concerns with the Digital Asset Regulation Act (“DARA”).
In the letter we explained that as is, the current bill applies a uniform regulatory framework to both CeFi and DeFi. But because these two “markets” function in different ways, they present different risks to consumers and must be treated differently from a regulatory perspective.
Gitcoin Campaign
In April, we were thrilled to be included in a Gitcoin beta round, led by Coinbase, that supports organizations on the front lines of crypto policy.
Given the events over the last several months, the round was perfectly timed to supercharge our efforts and explain to policymakers & regulators why we need sensible policy to ensure DeFi flourishes in the US and the US remains a hub for innovation.
Supporting this gitcoin round directly aids organizations on the ground in DC.
As always, your support empowers us to make the case for DeFi, protect its nascent but immense potential, and build a policy landscape welcoming of this incredible innovation.
Media
Op-Eds
CoinTelegraph: CBDCs will lead to absolute government control
Authored by Miller Whitehouse-Levine
The American Conservative: The Wrong Lesson from the Fall of FTX
Authored by Lizandro Pieper
Print/Online
Axios: U.S. Treasury looks at DeFi and crime
"Those frameworks were developed based on how the global economy worked in the 1970s, and are predicated on the assumption that transactions must occur through custodial financial intermediaries," DeFi Education Fund CEO Miller Whitehouse-Levine said in a statement.
POLITICO: DeFi’s turn in the barrel
“DeFi protocols function in a different way than traditional finance, and trying to apply existing AML/CFT rules, isn’t going to accomplish AML/CFT objectives,” DeFi Education Fund policy director Miller Whitehouse-Levine told MM.
Blockworks: Treasury Review Acknowledges Traditional Finance, Not DeFi, Preferred by Criminals
“While the assessment does, at times, demonstrate a sophisticated understanding of the DeFi landscape, it evidences a tension between the idea that decentralization is irrelevant in determining compliance obligations under existing AML/CFT controls and the idea that decentralized protocols are a novel tool unanticipated by existing frameworks,” Miller Whitehouse-Levine, CEO of the DeFi Education Fund, said in an email.
Semafor: Business Newsletter
"No company has tried harder to productively engage with the agency. The SEC's crusade will only continue to encourage Americans to transition to businesses in off-shore jurisdictions, and the consequences of that should be predictable given the multiple collapses of 2022." - Miller Whitehouse-Levine, CEO, DeFi Education Fund
MarketWatch: ‘Crypto is dead in America.’ How FTX’s collapse instigated a Biden crackdown on the digital-asset sector.
Miller Whitehouse-Levine, chief executive officer at the DeFi Education Fund, a DeFi advocacy organization, sees that Gensler’s attitude toward the sector shifted markedly early last year, when he stopped advocating for Congress to pass legislation “to prevent transactions, products and platforms from falling between the regulatory cracks,” as he did in an August 2021 speech.
The Defiant: Gensler Refuses To Call Ether A Security At Congressional Hearing
Miller Whitehouse-Levine, who heads the DeFi Education Fund crypto advocacy group, said Gensler’s appearance “underscores the thesis that [he] has made the policy choice to try and ban crypto in this country.”
The Defiant: “Everybody” Should be Concerned About the SEC’s Proposed Rule Change for DeFi
“Everybody and their mother,” should be concerned, Whitehouse-Levine said in an interview. Validators of blockchain transactions, members of DAOs, and open source developers, are potentially liable, he said. The DeFi Education Fund is a research firm which advocates for DeFi with policy-makers.
Capitol Account: Grading Gensler: Advocates Assess SEC Chief Two Years In
Top line: F- [grade]. Chair Gensler has morphed the SEC from being the gold standard of financial regulators – an agency that protects American investors and the primacy of its capital markets by adapting its statutorily-authorized regulations to innovative technologies – to being an agency that actively engages in merit-based policymaking. That approach is undermining the SEC’s pursuit of its mission and its credibility already. And in turn, it risks doing lasting damage to the agency and the markets it oversees.
Capitol Account: ABA's Nichols Talks SVB Turmoil, Pot Banking and the CFPB War on 'Junk' Fees
Not surprisingly, the study isn’t going over well with DeFi advocates, who have long bristled about the U.S.’s approach to regulating the technology. DeFi, they argue, can’t be overseen like a traditional financial services firm because it doesn’t fit into the system – it’s just two parties using smart contracts on a blockchain. Here’s a comment from Miller Whitehouse-Levine, the chief executive officer of the DeFi Education Fund: “While the assessment does, at times, demonstrate a sophisticated understanding of the DeFi landscape, it evidences a tension between the idea that decentralization is irrelevant in determining compliance obligations under existing [anti-money laundering] controls and the idea that decentralized protocols are a novel tool unanticipated by existing frameworks. Those frameworks were developed based on how the global economy worked in the 1970s and are predicated on the assumption that transactions must occur through custodial financial intermediaries, an assumption that is no longer valid.”
CoinTelegraph: Blockchain Association files brief in Tornado Cash case
The advocacy group was joined by the DeFi Education Fund in arguing that the crypto mixer has important social functions and that the sanctions from the Office of Foreign Assets Control could set a dangerous precedent.
Podcasts
The PGP for Crypto Podcast: Miller Whitehouse-Levine, CEO of DeFi Education Fund
Blog Posts
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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