Here’s what the DeFi Education Fund (DEF) has been up to in November. If you have any questions or would like to learn more about a specific activity, please do not hesitate to reach out.
From the midterm election results and the sudden collapse of FTX to the Ooki DAO case and the DCCPA, November has been a momentous month for crypto policy. Here are some of the specific items we worked on this past month.
FTX’s Implosion is NOT a DeFi Issue
The downstream political and regulatory implications of FTX’s collapse has kept us very busy.
We focused on explaining the differences between DeFi and CeFi and how FTX evidences the risks of CeFi and the benefits of DeFi. These events further demonstrate the importance of implementing regulatory clarity for centralized exchanges while refraining from inhibiting DeFi’s full potential. DEF exists to help realize a world in which anyone can enjoy the benefits of DeFi protocols, public blockchains, cryptocurrencies, and self-custody. The events of November only underscores the importance of our mission.
For reference, check out this tweet thread from our Head of Communications that highlights some of the best commentary on why FTX’s implosion demonstrates the need for DeFi.
Also, here are two other helpful resources we compiled this month:
We won’t sugar-coat it, as our Policy Director, Miller Whitehouse-Levine, shared in a weekly update, “the hill just got much taller and much steeper. It's up to all of us to prove that building decentralized systems immune to the failings so clearly evidenced this week is the very reason we are here.”
Congress appears slated to investigate what precisely occurred with FTX and incorporate any lessons learned from its failure into a future spot market regulatory framework, which means DCCPA is almost certainly going to be pushed to the next Congress. As with the prior two months, we continued making the case that imposing a framework designed for CeFi institutions in the digital commodity spot markets to DeFi protocols isn’t appropriate and doesn’t make much sense.
The Senate Agriculture Committee’s leaders have said that they will continue to work on this legislation, and we are hopeful that the next iteration of the bill will more precisely distinguish between CeFi businesses and DeFi protocols.
As a helpful resource, a few months back, we compiled a document outlining the key differences in CeFi markets and DeFi markets.
Ooki DAO v. CFTC
On November 21, we filed our response to the CFTC’s filing in the Ooki DAO matter, specifically concerning CFTC’s motion for alternative service.
We argued that the CFTC “cannot have it both ways” and that to “lawfully effect service consistent with its Complaint’s theory, the Commission must demonstrate both (i) that its method of service is reasonably calculated to reach those specific voting token holders and (ii) that Ooki DAO is actually an unincorporated association that can accept service.” Essentially, the CFTC failed on both of these points.
The next step in the matter is a hearing on the Motions for Reconsideration that will be held on December 7, 2022.
“I see it as a complete vindication of DeFi protocols and their transparency,” said Miller Whitehouse-Levine, the policy director at the DeFi Education Fund, a D.C.-based research and advocacy group.
Miller Whitehouse Levine, policy director at DeFi education Fund, a nonpartisan advocacy organization, argued in an interview that the FTX episode illustrates the benefits of DeFi, namely that those interacting with these protocols “don’t have to guess what’s on their balance sheets, because it’s all reported on chain and updated in real time.”
“I think it's going to take a long time for the dust to settle with this situation, for people to find out exactly what happened and what is happening. And I think that no matter what happens, it'll certainly be an unfortunate situation from which a lot of people can learn a lot. And I think that from that perspective, it might delay the bill,” said DeFi Education Fund Policy Director Miller Whitehouse-Levine, referring to the DCCPA.
“There are dozens of pictures of [Bankman-Fried] with policymakers and regulators,” Miller Whitehouse-Levine, policy director of crypto lobbying group DeFi Education Fund told Decrypt. “And I'm sure that, for many policymakers, he was the one crypto CEO they had met and spent time with. Obviously, it's not a good look when that one person ends up being, you know, a pretty big disaster.”
“The arguments made by Andreesen Horowitz’s lawyers echo those of the DeFi Education Fund, which attempt to convince the court that the CFTC didn't properly serve notice and that allowing the federal regulator to skirt existing legal requirements just because the technology involved in the case is novel could risk the Constitutional right to due process.”
CoinDesk’s The Breakdown: The Fight for DeFi in Washington, D.C., With Miller Whitehouse-Levine
On today’s “Breakdown” interview, NLW is joined by Miller Whitehouse-Levine, policy director at the DeFi Education Fund. They discuss the state of regulatory discourse in Washington, D.C., along with key recent events including Treasury Department sanctions.
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.