Senator Cynthia Lummis has expressed significant concerns over the Biden administration’s recent measures targeting the decentralized finance (DeFi) sector.
She challenges the Department of Justice’s (DOJ) interpretation that non-custodial software platforms, such as digital wallets, should be regulated as money transmission services.
Senator Lummis Commits to Fight For DeFi
According to Lummis, this perspective contradicts Treasury guidelines. It also infringes on fundamental American principles of property rights and the rule of law.
“I am deeply troubed by the Department of Justice’s hyper-aggressive argument that non-custodial software can constitute a money transmission service contradicts existing Treasury guidance, common sense, and violates the rule of law. I will do everything I can to fight for your rights to hold your own keys and run your own node,” Lummis stated.
Read more: What Is a Non-Custodial Wallet?
This issue emerges at a pivotal time as crypto assets like Bitcoin are increasingly embraced by the mainstream financial ecosystem. It raises critical questions about integrating regulatory frameworks without stifling innovation or infringing individual freedoms.
Moreover, the DOJ’s stance has sparked a strong backlash from the crypto community. Many fear such regulations could dampen the growth of the DeFi ecosystem. Advocates argue that overregulation could stifle technological innovation, which is essential for the US to maintain its leadership in digital finance.
Recent legal actions underscore the growing tension between regulators and the crypto industry. For example, the DOJ has pursued criminal charges against individuals such as the developers behind the Bitcoin mixer Samourai Wallet and the Tornado Cash platform. The DOJ accuses them of unlicensed money transmission.
Simultaneously, other regulatory bodies like the Securities and Exchange Commission (SEC) have targeted major DeFi platforms. Notably, the SEC issued a Wells notice to Uniswap on April 10, signaling potential enforcement actions. Uniswap’s founder, Hayden Adams, has vocally criticized the SEC’s approach, emphasizing the platform’s legality and significant role in modernizing financial systems.
“It’s been clear for a while that rather than working to create clear, informed rules, the SEC has decided to focus on attacking long-time good actors like Uniswap and Coinbase. All while letting bad actors like FTX slip by,” Adams said.,” Adams said.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
In response to what it views as regulatory overreach, Consensys, known for the popular MetaMask wallet, filed a lawsuit against the SEC on April 25. The lawsuit disputes the SEC’s classification of Ethereum (ETH) as a security and criticizes the agency’s detrimental approach towards developers and investors who rely on Ethereum’s decentralized infrastructure.
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