Bipartisan Bill to Regulate DeFi Sector Is “Unconstitutional” and “Arbitrary” – Coin Center & Blockchain Association

Jimmy Aki
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Crypto advocacy groups Coin Center and Blockchain Association have announced their non-acceptance of the latest decentralized finance (DeFi) bill proposed to the United States Senate. 

The two associations believed implementing the proposed regulatory policies would stunt the growth of blockchain technology, software developers, and free speech. 

Depth Insight of the Proposed CANSEE Act Bill

On July 19th and 20th, Coin Center and Blockchain Association slammed the U.S. Senate’s proposed Act Bill to regulate the decentralized finance (DeFi) sector as unworkable. 

There has been a significant clampdown on the growth of the DeFi space by several regulatory bodies, notably the Securities and Exchange Commission (SEC). 

This has caused a steep downtrend and uncertainty regarding the longevity of digital assets and blockchain technology in the United States.

However, the DeFi sector has suffered yet another blow from the U.S. Senate about putting an end to market manipulation and money laundering in the digital industry 

On July 18th, United States Senator Jack Reed and a leading group of other senators sponsored and introduced a bipartisan bill called the “Crypto-Asset National Security Enhancement Act (CANSEE).” 

According to Reed, the bill is intended to stop crypto-facilitated crimes, tighten know-your-customer (KYC) verification, and Anti-Money Laundering (AML) regulation, including sanctions for violators. 

On July 19, the CANSEE Act was officially published but received heavy backlash from DeFi space analysts and observers. 

The Bipartisan legislation proposal requires all DeFi services to adhere to the AML and economic sanction compliance obligations. These same practices applied to other financial corporations and centralized trading platforms. 

The CANSEE Act asserts that DeFi is deployed on anonymity technology. This makes it almost impossible to spot illicit transfers that evade traditional financial regulatory agencies. 

However, since the U.S. Senate Bipartisan legislation became public, it has elicited criticisms from crypto and DeFi enthusiasts. Many have aired their disappointment on what could be the most bizarre and inefficient regulatory framework ever. 

While the U.S. Senate bill’s major point may hold water, Coin Center and Blockchain Association believe it is a punitive measure targeted at decelerating the growth of the DeFi space. 

US Senate Bill Will Cause Drastic Decline of DeFi Space

Coin Center argued that the bill was developed without the input of integral players in the DeFi industry. 

While the Senate’s desire to combat crypto crimes has been made known, the bill could make developing the DeFi protocol unfeasible.

The crypto advocacy group stated that the CANSEE Act is messy, arbitrary, and unconstitutional due to its glaring intention to remove anonymity from the DeFi sector. 

In its bid to proffer possible solutions to the inherent problems of the bill, Coin Center has indicated its interest in participating in a constructive discussion with the bill’s sponsors. 

This is to protect the rights of software developers and consumers to write, publish, and run code.

Blockchain Association, a reputable crypto association, also declared that the new legislation bill would not be compatible with blockchain technology. 

The association argued that the illicit transaction cited in Jack Reed’s Bipartisan bill is a tiny fraction of all digital assets transactions in 2022. 

The figure for illicit transactions in 2022 was 0.24%. The association claimed that illicit transactions are far less than the traditional finance sector, which the United States Senate believed was the pacesetter for the DeFi industry. 

The crypto group also stated it had supported several amendments to keep bad actors from the digital asset ecosystem, including the approval of the National Defense Authorization Act. 

While Blockchain Association remains committed to being resourceful for the U.S. legislature, it considers the CANSEE Act a disappointing punitive and redundant measure. 

At press time, there is no official statement from Jack Reed or other U.S. senators. However, observers believe the bill lacks the competence to be considered a proposal. 

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.