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DeFi Education Fund

@fund-defi

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DeFi Education Fund pfp
DeFi Education Fund
@fund-defi
“As some have attempted to extend the BSA framework to DeFi, it is crucial to assess its current inefficacies and recognize that applying its burdensome requirements to DeFi would not only be impractical but would also cripple an emerging industry without meaningfully curbing illicit finance.” Read the full article at the link: https://www.defieducationfund.org/post/examining-the-burdens-costs-and-failures-of-the-bank-secrecy-act-bsa-and-the-potentially-disast
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DeFi Education Fund
@fund-defi
The Bank Secrecy Act (BSA) is a failure in traditional finance, yet recent legal theories being pushed by the DOJ are seemingly extending BSA’s burdensome framework to DeFi—ultimately, putting American innovation, privacy, and decentralization at risk. In a new article by DEF’s Gavin Zavatone & Henry Michaelson, we continue our exploration of the BSA. This latest paper focuses on why the BSA is ineffective and would cause existential harm to the DeFi industry. https://www.defieducationfund.org/post/examining-the-burdens-costs-and-failures-of-the-bank-secrecy-act-bsa-and-the-potentially-disast
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DeFi Education Fund
@fund-defi
Developers beware: Could your code land you in legal trouble? The DOJ’s indictment of Samourai Wallet's founders represents a direct attack on software developers building non-custodial, privacy-enhancing tools. In a new paper, authored by DEF’s Spencer Peek, we examine the DOJ's indictment, arguing that their non-custodial, privacy-enhancing software does *not* constitute an unlicensed money transmitting business under existing laws. To dig deeper into why this matters, please click the link below for the full paper: https://www.defieducationfund.org/_files/ugd/84ba66_87dfb370e81a4766811bf16e5293c6da.pdf
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DeFi Education Fund
@fund-defi
end/ Be sure to read the full piece to get further insights from Miller and Amanda on this issue. https://a16zcrypto.com/posts/article/doj-actions-against-defi/
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DeFi Education Fund
@fund-defi
3/ Unfortunately, we’ve already seen examples of how ignoring this intuitive principle leads to “perverse outcomes.” The Department of Justice has flatly ignored this distinction, holding software developers of neutral tools like [Roman Storm] liable for the actions of third-parties. This needs to change.
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DeFi Education Fund
@fund-defi
4/ That is why a top policy priority for DEF in 2025 is codifying the legally correct understanding of “control” in law, including in the context of what constitutes “money transmitting” in that case. If you care about this issue or want to learn more, we want to hear from you. Shoot us a DM so we can find time to chat.
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DeFi Education Fund
@fund-defi
2/ Why? Because “holding people responsible for systems and activities over which they exercise no agency or control leads to perverse outcomes.” “It wouldn’t make sense to hold carmakers responsible for the bad driving of their vehicles’ users, just as it wouldn’t make sense to impose car manufacturing obligations on drivers themselves.”
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DeFi Education Fund
@fund-defi
“The same intuitive principle that governs our understanding of car manufacturer and driver liability should be the foundation of sensible policymaking in the context of decentralized networks and protocols.” Today, @a16zcrypto published a piece authored by DEF’s @millercwl & @atuminelli discussing why sound policymaking for crypto should always start from an analysis of “control” in a given system. 🧵 https://a16zcrypto.com/posts/article/doj-actions-against-defi/
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DeFi Education Fund
@fund-defi
Today, we are excited to share that Jennifer Rosthenthal has joined DEF as our Chief Communications Officer 🚀 https://www.defieducationfund.org/post/defi-education-fund-def-is-pleased-to-welcome-jennifer-rosenthal-as-chief-communications-officer
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DeFi Education Fund
@fund-defi
2024 was pivotal for DeFi & crypto policy. We worked tirelessly to educate lawmakers on DeFi’s promise, how it works, and the importance of protecting developers’ and users’ rights. Read our year-end note for a recap of our work + a glimpse into 2025. https://www.defieducationfund.org/post/2024-year-in-review
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DeFi Education Fund
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end/ Be sure to check out another recent paper from the DEF team on the BSA. https://warpcast.com/fund-defi/0x37fe0ccf
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DeFi Education Fund
@fund-defi
5/ Lastly, and importantly, the paper calls on Congress to change the law, specifically by amending section 1960 to clarify the original intention: “only those who knowingly control criminal funds should be treated as criminals themselves.”
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DeFi Education Fund
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4/ Section 1960 is at the center of the Tornado Cash and Samurai Wallet criminal cases. Given the upcoming Storm trial in April, where the government will have to prove Storm violated Section 1960 among other criminal code provisions, the argument in this paper is central to important legal issues facing the digital asset industry.
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DeFi Education Fund
@fund-defi
3/ With the advent of permissionless, disintermediated blockchain technology, a new tension arose between the reality of this tech and the government’s focus on preventing crime. While the government has historically relied on the Bank Secrecy Act, the government has recently relied on Section 1960 more and more to address money laundering. While the paper is about Section 1960 more generally, it uses Tornado Cash as a case study for legal analysis.
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DeFi Education Fund
@fund-defi
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DeFi Education Fund
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In a paper published today in The International Academy of Financial Crime Litigators, DEF’s @atuminelli along with @jchervinsky & @dbarabander from @variant take a deep dive into the law on unlicensed money transmitting businesses, 8 U.S.C. § 1960, and argue that, based on an extensive review of the case law and statutory history, control over customer funds is necessary to define an entity as a “money transmitting business” - a business that “transfers funds on behalf of the public.” 🧵👇 https://www.defieducationfund.org/post/def-publishes-new-paper-in-in-the-international-academy-of-financial-crime-litigators
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DeFi Education Fund
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end/ As we approach the beginning of a new Congress, establishing certainty around this core issue for DeFi developers and users will remain a core focus of DEF. If you have any questions or want to connect with a member of our team on this issue further please shoot us a DM or reach out to [email protected]
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DeFi Education Fund
@fund-defi
4/ Furthermore, the paper argues why it is necessary for Congress to step in and clarify that the BSA is not applicable across the blockchain technology stack and enact something into law in the spirit of Rep. Emmer's Blockchain Regulatory Certainty Act and Rep. Davidson's KYC Act. https://www.congress.gov/bill/118th-congress/house-bill/1747 https://www.congress.gov/bill/118th-congress/house-bill/4841/text#:~:text=To%20prohibit%20Federal%20agencies%20from,use%2C%20and%20for%20other%20purposes
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DeFi Education Fund
@fund-defi
3/ In this new paper, DEF investigates the history and design of the BSA, its application to crypto, and explains why software providers and operators across the technology stack are not subject to the BSA.
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DeFi Education Fund
@fund-defi
2/ The BSA, a law from the 1970s that is a central instrument in government surveillance of American financial transactions, had no way of foreseeing the rise of the internet and the ability to transact without traditional intermediaries.
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