1) As promised:
My current thoughts on crypto regulation.
Conversation
Replying to
Hey I'd be honored if you'd read my response, and to know what you think of the conclusions.
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eh so I think I feel not very heard by you on blocklists?
like, I don't know how many times I wrote--both in my post and in my tweets--that I *don't* think it should mean that e.g. validators and blockchains are police, but my reading of your post implies that you think I did?
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From your original post, it isn't clear where/how you draw the line. I think this is why so many have been upset about.
"Everyone should respect OFAC’s sanctions lists"
Everyone? Every American or all humans? Should a protocol developer from Japan be blocking all Iranians?
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Hear you on that!
From the post:
"Similarly, validators have a core duty to correctly validate blocks-not to judge or police them"
"Validators themselves purely have the goal of confirming that proposed blocks..., not separately parsing and policing regulatory content"
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That's well said, but then... why should a validator just "process the data" but a front-end dev should be making AML judgements?
^ this is the fundamental incongruity of your post and the most important to address.
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I think that making the distinction between US-based front-ends vs validators/smart contracts is the compromise to make, practically: it preserves the core freedom while accepting that things that look like BDs will register as such.
But one could try a different line instead!
That would just mean Defi devs will have to leave the US so they're not forced to comply with censorship. How is that a good regulation for both defi and the US?
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This raises speech concerns - Assuming the "back end" is a permission-less blockchain or other distributed system, the act of deploying a front end is mere speech and fundamentally different than deploying a front end for a back end where one also controls the actual capabilities
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Front ends are just tools for sharing info and creating JSON blobs. They are like cheque writing facilities. Nothing actually happens with the info until the user submits their JSON blob to the chain, which is usually done via another app entirely. Front ends aren't exchanges.
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cheque writing facilities, well said.
the entire premise of the tech and use case is... that its decoupled application authority... no single centralized party
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Then the disinction should be, "persons acting like BDs should register as BDs" instead of "websites that allow you to access DeFi products should be regulated as BDs". Its fairly clear cut - top layer access websites vs. middle layer services (actual business activity).
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why do you think that is a reasonable compromise? Shouldn’t it be about something that acts like a BD (e.g. custodial services) not just something that “looks” like one? More importantly an interface that just connects to publicly available services is just passing info.
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Put another way, and haven’t seen you respond directly to this. Do you really think a website like etherscan which lets you “write” to smart contracts through the interface should require licensure and kyc? I don’t think anyone mistakes etherscan for a broker/dealer.
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Very sophisticated take maybe take this to congress and we can just wrap it up there hey
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Really hope you change your stance on this. Front end websites are not intermediaries that should be licensed or required to register.
This “compromise” only helps early VC-backed companies, is a dangerous path for speech, & is one that the DeFi community will never get behind.
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