Programmable Regulation is Essential for DeFi’s Legal Future
The post Programmable Regulation is Essential for DeFi’s Legal Future appeared on BitcoinEthereumNews.com. Opinion by: Raks Sondhi, chief operating officer of Freedx Governing composable, borderless and programmable ecosystems with rules made for simple, static financial systems presents a fundamental challenge. In the past year alone, decentralized finance (DeFi) platforms held over $60 billion worth of crypto assets locked in their protocols. Yet most jurisdictions still lack a clear definition of a decentralized autonomous organization (DAO). This confusion is slowing innovation and undermining the credibility of regulatory institutions. Lawmakers still assume there is a centralized actor to license, audit or subpoena. However, DAOs are intentionally decentralized, smart contracts operate autonomously and onchain assets can move without permission. Although US regulators have started targeting protocols under existing securities laws, courts struggle to determine if autonomous software can be held liable. Legacy regulatory tools were not designed to oversee systems that evolve in real-time. These challenges have led regulators worldwide to attempt new crypto regulation approaches. On a global scale, the Markets in Crypto-Assets (MiCA) is attempting to provide a unified framework for regulation in the EU, going as far as restricting the use of tokens like Tether’s USDt (USDT) that do not comply with its standards. In the US, the SEC and Commodity Futures Trading Commission have brought legal action against DAO participants and DeFi protocols. Some US states, like Wyoming, have even passed laws to give DAOs a kind of corporate status. Yet these efforts seem deeply limited and rely heavily on retroactive enforcement, which results in a chilling effect where builders hesitate to move forward, capital sits idle, and regulations are in a cat-and-mouse chase that benefits no one or doesn’t solve the actual problem. They are slowly patching holes in a highly dynamic and evolving space. Governing software through embedded compliance How do we stop chasing? The answer lies in some sort…
The post Programmable Regulation is Essential for DeFi’s Legal Future appeared on BitcoinEthereumNews.com.
Opinion by: Raks Sondhi, chief operating officer of Freedx Governing composable, borderless and programmable ecosystems with rules made for simple, static financial systems presents a fundamental challenge. In the past year alone, decentralized finance (DeFi) platforms held over $60 billion worth of crypto assets locked in their protocols. Yet most jurisdictions still lack a clear definition of a decentralized autonomous organization (DAO). This confusion is slowing innovation and undermining the credibility of regulatory institutions. Lawmakers still assume there is a centralized actor to license, audit or subpoena. However, DAOs are intentionally decentralized, smart contracts operate autonomously and onchain assets can move without permission. Although US regulators have started targeting protocols under existing securities laws, courts struggle to determine if autonomous software can be held liable. Legacy regulatory tools were not designed to oversee systems that evolve in real-time. These challenges have led regulators worldwide to attempt new crypto regulation approaches. On a global scale, the Markets in Crypto-Assets (MiCA) is attempting to provide a unified framework for regulation in the EU, going as far as restricting the use of tokens like Tether’s USDt (USDT) that do not comply with its standards. In the US, the SEC and Commodity Futures Trading Commission have brought legal action against DAO participants and DeFi protocols. Some US states, like Wyoming, have even passed laws to give DAOs a kind of corporate status. Yet these efforts seem deeply limited and rely heavily on retroactive enforcement, which results in a chilling effect where builders hesitate to move forward, capital sits idle, and regulations are in a cat-and-mouse chase that benefits no one or doesn’t solve the actual problem. They are slowly patching holes in a highly dynamic and evolving space. Governing software through embedded compliance How do we stop chasing? The answer lies in some sort…
What's Your Reaction?
