Conversation

3) First off—a huge thanks to everyone who gave constructive feedback, comments, and criticism—notably

@ErikVoorhees

and

@RyanSAdams

but too many more to name. I’ve revised my post some already, and will continue to do so.

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4) Thanks particularly to everyone who highlighted the core of crypto: economic freedom. The freedom to own your own assets; to own your own data; to build your own programs

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5) None of this works if you need active permission to do everything: commerce grinds to a halt. If you show up at 7-11 to buy a bagel, and next thing you know you’re pulling out a passport and social security number and taking selfies, something’s gone wrong.

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6) On the DCCPA: a bunch of the comments the DeFi community is making are extremely important. Here’s where it stands:

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7) The core goal of the bill is to regulate *centralized* crypto venues. The main *DeFi* touchpoint is: *how can a regulated centralized entity interface with DeFi?*

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8) In particular, it is *not* making claims about what DeFi devs, smart contracts, and validators must do. It’s looking to eventually establish guidelines about how e.g. FTX’s platform--or Fidelity's--could interface with DeFi contracts.

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9) This gets right what the infrastructure bill a while ago got wrong: that devs and validators aren’t platforms, and shouldn’t be regulated as such. Which is a huge step forward! But again we’ll have to see the final language; I’d only support a version that gets this right.

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8:12 AM · Oct 23, 2022Twitter Web App

10) The most surprising thing is how constructive and receptive the lawmakers are to everyone's feedback--including the DeFi community; it’s one of the reasons I’m optimistic about the bill. Granted, we’ll have to see the final language.

Replying to

11) One thing that may ultimately be required centralized entities like FTX: there are likely to be disclosure/etc. requirements, and potentially “customer suitability tests” of some sort. It’s really important that this is done in an equitable way.

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12) Historically, these have been a toxic combination of wealth tests and variants on ‘do you have a fax machine’ that are highly exclusionary towards the poor, minorities, and rural investors. It’s bad to gate building wealth on having wealth.

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13) Instead, they should drive at the core question: Does the customer fully understand the product and its risks? Are they making an informed decision? If you’re going to gate products on regulated exchanges, do it on understanding, not wealth.

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14) (You can check out ftx.us/derivs for an example of what this could look like)

15) (Also I thought the section on hacking was interesting and going to be one of the more controversial ones. Boy was I wrong about that. But either way I think the 5-5 standard would help give people a lot more confidence and comfort! And save people a lot of money.)

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16)On sanctions: a) validators and smart contracts need to be free, permissionless, and decentralized b) we should have tooling to make screening easier and quicker c) I have sympathy for innocent people caught in broader blocks—that’s a policy conversation worth having

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17) Anyway: I totally understand that lots of people will disagree with me on various points. That’s great—it means I have people to learn from. And I really do think that regulation is going to get better, clearer, and create pathways for crypto to come back onshore.

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