DeFi Debrief

October 24: DEF Submissions to Treasury; Fed Conference on Payments Innovation

DEF Submissions to Treasury Department on GENIUS Act Implementation

DEF, Paradigm, and Solana Policy Institute’s Submission to the Treasury Department 

On October 17, 2025, DEF, Paradigm, and Solana Policy Institute submitted a response to the Treasury Department’s “Request for Comment on Innovative Methods To Detect Illicit Activity Involving Digital Assets” (“RFC”) in connection with its implementation of the Guiding and Establishing National Innovation for US Stablecoins Act (the GENIUS Act).

In the joint submission, we summarized existing risk management solutions and explored digital identity, including its considerations, risks, and possibilities. In particular, we highlighted the need for strengthened cybersecurity measures and structured collaborations between public and private experts. The Treasury Department has an opportunity to incentivize innovative risk management solutions and facilitate information sharing with the industry for detecting illicit activities more effectively.

Please click here to read the full text of our joint submission.

DEF’s Digital Identity Submission to The Treasury Department 

DEF also submitted separate comments in response to the Treasury RFC, focusing on the considerations, risks, and possibilities of digital identity technology. While the GENIUS Act instructs the Treasury to issue an RFC on innovative methods for financial institutions to detect illicit activity involving digital assets, the statute does not mention digital identity specifically. The RFC, however, asks for responses considering smart contract-based digital identity verification as an approach. We support the Treasury's mission to mitigate illicit activity, and our letter offers practical insights and technology-driven recommendations to help advance that mission.

DEF emphasizes that privacy is not an obstacle to security but a vital component of both personal and national safety. We stand committed to protecting the right to privacy as the foundation to a free and open society, and to the safety and dignity of its people.

Read our full response here. 

Federal Reserve Payments Innovation Conference and DeFi 

On October 21, 2025, the Federal Reserve Board held its first-ever Payments Innovation Conference in Washington, D.C., a direct dialogue between crypto leaders, Wall Street executives, and central bank officials. Governor Christopher J. Waller set the tone, noting that digital asset innovation is “transforming payments” and explained that “streamlined payment accounts” (described as a "skinny" version of the Fed master accounts) could let legally eligible non-banks—including compliant stablecoin issuers—access Fed rails directly without the full privileges of a traditional master account.

The flagship panel, “Bridging Traditional Finance with the Digital-Asset Ecosystem,” moderated by DEF Board Member, Rebecca Rettig (Chief Legal Officer at Jito Labs), focused on wiring bank rails to open, on-chain infrastructure. Panelists agreed that DeFi is still small in macro terms (≈4% of crypto; <1% of GDP), yet strategically important if interoperability and compliance guardrails are built in from the start. Rebecca explained, “... the total value locked in all DeFi applications comprises about 4% of the total crypto market, and significantly less than 1% of GDP. In other words, there's an acknowledgement that DeFi has great potential to bring new, disruptive features to traditional payments and financial services, but there is also a very long road to go. This road is paved with new technology."

The tokenized products panel spotlighted BUIDL— BlackRock’s USD Institutional Digital Liquidity Fund—underpinned by cash, U.S. Treasury bills, and repurchase agreements (repo transactions) on public blockchains. BlackRock’s Chief Operating Officer Rob Goldstein emphasized the runway, saying, “this hasn’t even started yet,” noting most tokenization use-cases remain pilots or limited production. There was also a stablecoin panel that zeroed in on reliability, bank-rail connectivity, and cross-chain mobility, and an AI panel that emphasized the possibilities of programmable, agent-driven payments—together, driving home that stablecoins, tokenization, and programmable rails are now firmly on the reg-tech agenda.

DeFi Dictionary

The word of the week underscores the importance of DeFi. With no central vault of user data, i.e., no honeypot waiting to be exploited by a hacker, DeFi technology enables users to maintain custody and control of their assets and data. Our word of the week: Information Honeypot.

Notable and Quotable

“In 2025, the total crypto market cap crossed the $4 trillion threshold for the first time, marking the industry’s broad progress. The number of crypto mobile wallet users also reached all-time highs, up 20% from last year. The shift from a hostile regulatory environment to a much more supportive one, alongside accelerating adoption of these technologies — from stablecoins to the tokenization of traditional financial assets to other emerging use cases — will define the next cycle.” - Excerpt from a16z Crypto State of Crypto 2025 Report