DeFi is a 1st Amendment right, expert says at hearing

Decentralized finance advocates have argued against applying strict anti-innovation rules to the nascent digital asset sector.

At a hearing of the U.S. House Financial Services Committee titled “Deciphering DeFi: Dismantling the Future of Decentralized Finance,” a group of DeFi advocates testified to protect the industry from stricter anti-money laundering rules and full surveillance of web3 users.

Crypto skeptics like Representative Bill Foster and other Democratic members of Congress have claimed that DeFi developers should be held accountable for the criminal use of blockchain technology.

Rep. Foster and other anti-DeFi lawmakers reiterated their proposal to tighten the regulatory noose around crypto activities. Specifically, committee members highlighted the Treasury as the best agency to enforce stricter AML rules and crack down on blockchain coders.

US Representatives also questioned claims that blockchain is being used as a tax evasion tool, a claim Coin Center research director Peter Van Valkenburgh strongly disputed.

This is a correct position and it’s truly shameful and a mistake how many liberal/center-left people embrace Copaganda to the point of rejecting payment anonymity as something coded as evil/pro-crypto and not necessarily an explicit defense of civil liberties. https://t.co/mvsqmMMsgs

— Rohan Gray (@rohangrey) September 10, 2024

Van Valkenburgh argued that using a public, transparent, decentralized ledger known as a blockchain network would make it harder to evade regulators because anyone could examine transactions. Lawmakers at the so-called crypto meeting also echoed Van Valkenburgh’s view, noting that criminals are more likely to use legacy financial systems to move billions to trillions of dollars in illicit wealth.

DeFi debate intensifies

Since the cryptocurrency’s inception, U.S. politicians have often dismissed the Web3 complex as a Wild West rife with scams. Still, the conversation around DeFi has gained momentum in Congress and some of the biggest financial names, like BlackRock, whose advocates have suggested that political headwinds are shifting in crypto’s favor.

Coinbase CLO Paul Grewal said that regardless of who wins the presidential election, US citizens will elect a pro-crypto Senate.

Bitcoin (BTC) and blockchain have also been hot topics in the race between Republican candidate Donald Trump and Democratic candidate Kamala Harris. Former President Trump promised to support the industry and established America as the cryptocurrency capital of the world. But there are doubts about Trump’s ability to execute and genuine concerns about the industry.

Similarly, the industry has a complicated relationship with Harris’ potential regime. The incumbent Vice President has accepted crypto donations through Coinbase and reportedly interacted with industry leaders, but Harris’ stance and approach to crypto policy leaves much room for speculation.

However, cryptocurrency leaders such as Ripple co-founder Chris Larsen have supported Harris for President.