DeFi leaders are concerned about the uncertain future of the market structure bill
The Digital Asset Market Transparency Act (CLARITY) has been extended indefinitely in the US Senate Banking Committee, with leaders in decentralized finance using it to push lawmakers over their concerns about the legislation.
Before Republican leaders on the Banking Committee moved late Wednesday to extend the markup, crypto industry groups raised concerns about the potential impact on tokenized equities, stablecoin rewards and DeFi platforms. The Diffie Education Fund said Wednesday that some of the proposed amendments “could seriously harm Diffie's technology and/or make market structure rules worse for software developers.”
Crypto venture capital firms have said the law needs reform to address concerns surrounding DeFi and developer protection.
Alexander Grieve, vice president of government affairs at crypto investment firm Paradigm, said the top priority was protecting developers and DeFi, saying “significant edits” needed to be made to the bill. Jake Chervinsky, Variant's chief legal officer, said on Thursday that the bill fell below standards, noting that his “primary concern” was DeFi.
“The final draft leaves open the possibility that all types of developers and infrastructure providers will be required to KYC users, register with the SEC, or comply with other rules inconsistent with DeFi,” Chervinsky said on X.
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The bill was slated for production after months of delays amid lawmakers' debates over decentralized financing, conflicts of interest and stability coin provisions. However, Tim Scott, chairman of the US Senate banking committee, said Coinbase CEO Brian Armstrong on X, after saying that the exchange could not support the bill and announced a “short-term suspension”.
What is the DeFi battle in the account?
Contrary to efforts by banks to ban CLARITY, an interest-bearing stablecoin, several industry advocates, including Armstrong, say the current version of the bill would limit the activity of DeFi platforms and could drive companies out of the US.
“I'm confident we'll solve some of the DeFi issues,” Cody Carbone, CEO of crypto advocacy organization Digital Chamber, told Cointelegraph. “I think some of them now [focus is] Narrowing down certain definitions. But I feel confident that in the next couple of weeks, or at least, we'll get to a good place in DeFi, bringing it to the next mark.
“[DeFi and crypto developers] Todd Phillips, assistant professor of law at Georgia State University's Robinson College of Business, doesn't care about product struggles in a Friday X-Post. “They care about having a strong market structure that allows their clients to grow their money in banks or statscoins rather than putting their money in banks or statscoins.
Some Senate Democrats have reportedly raised concerns about the bill, which would allow DeFi platforms to facilitate illegal transactions, pushing for restrictions on reforms, including one suggested by the DeFi Education Fund.
No new marking dates have been scheduled since Friday.
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