The U.S. Senate is weighing the possibility to regulate the decentralized finance (DeFi) market like traditional banks. The bill will impose strict controls on individuals and companies using these DeFi protocols and solutions, which have been expanding in recent years. The goal is to have more standardized regulation across industries.
U.S. Government Works on Regulatory Measures for DeFi
The U.S. Senate is working in order to regulate the decentralized finance market. Over the last few years, we have seen multiple attempts to regulate the crypto industry, and many of them have prospered. However, it will become more difficult for U.S. institutions to regulate how individuals engage with decentralized applications and protocols.
One of the main goals of the new attempt to regulate the DeFi market is to fight against money laundering. Therefore, they will try to impose anti-money laundering regulations (AML) that will impact not only decentralized exchanges but also other protocols and applications.
The bill was proposed on July 19th by Senator Jack Reed. The bill explains that the legislation would search to regulate those that control a specific decentralized finance application. In addition, they will also go for those that make the protocol available to investors.
The bill reads:
“If nobody controls a DeFi protocol, then, anyone who invests more than $25 million in developing the protocol will be responsible for these obligations.”
Hence, it will be very important for crypto companies to understand how they can be impacted. It will also create a situation where firms will be pushed to update how their protocols work and how they can be compliant with U.S. legislation. While this bill has not yet passed, there is a clear decision from U.S. institutions to control and regulate the crypto market as much as possible.