Proposal [Non-Constitutional]: Funding DAO Legal Defence and Advocacy with Defi Education Fund

Overview

This proposal is to provide the DeFi Education Fund (DEF) with one million ARB across two disbursements to support them in fulfilling their mission.

Introduction

The DeFi Education Fund (DEF) is the only advocacy organization that focuses specifically on fighting for policy outcomes favorable to decentralized finance developers and users on the ground in Washington, DC. The DEF uniquely provides a dedicated voice for DAOs and DeFi in legislative, regulatory, and legal advocacy efforts. You can find a summary of their past work, which has included defending DAOs in court, as well as providing comment and consultation to regulators to avoid burdensome rules and regulations in the US, below.

Rationale

DeFi’s policy challenges are immense and interest in DeFi has only grown since the DEF got to work in 2021. Following the collapse of FTX and with the return of the bull market, there is acute interest in DeFi on Capitol Hill and state legislatures, as well as inside federal and state government agencies. Providing meaningful educational outreach about DAOs and DeFi to lawmakers while also assisting in the legal defense of decentralized organizations is a role not played by anyone else in the US.

At this time, DAOs and DeFi protocols face several potentially catastrophic threats: a live IRS proposal would mandate the creation of intermediaries to conduct tax reporting (i.e., ban on disintermediated systems) and a live SEC rulemaking would define anyone loosely related to a DeFi protocol—including the underlying chain’s miners/validators—to be national securities exchanges like the New York Stock Exchange. Moreover, bills written to regulate CeFi often inadvertently capture DeFi protocols and subject them to compliance obligations designed for CeFi businesses.

If DeFi development and DAOs are to have a future in the United States, we need to double down on our advocacy efforts to protect DeFi from these myriad policy risks while laying the foundation for longterm proactive policy solutions favorable to DeFi and DAOs. There is a reason TradFi businesses collectively spend over $1 billion per year on U.S. lobbying and policy efforts: it works, and we’re making it work for DeFi.

Originally funded by Uniswap governance in 2021 with a one million UNI grant, DeFi Education Fund’s work is a public good that periodically requires funding to continue. This proposal would contribute funding to the organization so that it can expand its legislative, regulatory, and legal advocacy and education efforts on behalf of DeFi and DAO developers and users.

The DeFi Education Fund’s work focuses on (further details below):

  • Legal advocacy and litigation for DeFi, DAOs, and developers;
  • Fighting regulatory overreach from the SEC, CFTC, FinCEN, CFPB, IRS, et. al.;
  • Advocating and lobbying for DeFi in Congress and at the state level;
  • Educating elected representatives and traditional media about DeFi and its benefits; and
  • Informing and serving the DeFi community about policy and regulatory developments.

DEF is eager to continue leading the charge in the fight on behalf of DeFi. We can only do that with the backing of the DeFi community, which is why we will be initiating governance proposals for financial support from several DAOs. With the community’s support, we will

  1. super charge our impact litigation efforts to reshape the legal landscape to DeFi and DAOs’ benefit;
  2. expand our outreach to legislators and double down on our educational efforts;
  3. more vigorously challenge the regulatory onslaught targeting DeFi; and
  4. enhance our ability to engage in state-level debates and jurisdictions outside of the United States.

If DeFi development and DAOs are to have a future in the United States, we need to double down on our advocacy efforts to protect DeFi from these myriad policy risks while proactively laying the foundation for longterm policy solutions favorable to DeFi and DAOs. We stand ready and able to do so with the community’s backing, and we appreciate your consideration.

More Information on DEF

Implementation

Upon passage, 500,000 ARB is to be transferred to and held in a dedicated wallet at Coinbase. The remaining 500,000 ARB will be transferred six months after passage if the following deliverables have been met:

  • The DEF posts monthly updates summarizing its activities to support decentralized finance on the Arbitrum forum;
  • The DEF hosts update calls / Q&As at least every other month over this time period to keep the Arbitrum community updated on the legal and regulatory climate and on an ad hoc basis if there are important developments of interest to the Arbitrum community;
  • The DEF is responsive to Arbitrum community questions and requests for information about policy developments or organizational developments; and
  • The DEF’s work continues to focus on DeFi and DAO advocacy.

We hold half of any tokens we receive for at least 12 months and publish a sales plan before selling any tokens.

Conclusion

The DeFi Education Fund is a nonprofit organization with a demonstrated history of being in the trenches fighting for DAOs and decentralized finance. Whether looking to provide legal assistance when DAOs and their members are targeted, providing educational resources, or fighting for policy changes, the DeFi Education Fund is the only major crypto advocate that focuses solely on decentralized web3.

FAQs

  1. Why are you raising money now if you have about two years of runway at your current burn?

We are seeking Arbitrum’s support now for three primary reasons.

First, we need a sense of our longer term funding in order to take on the projects that our work focuses on, which can play out over several years. For example, our legal challenge of the patent covering oracle tech that is being used against DAOs will take a total of at least two years from start to finish. If we did not have a good expectation of being able to operate two years after starting that challenge, we would not have been able to take that project on. In addition, because we hold tokens long term, we are exposed to crypto market price fluctuations.

Second, unexpected, ad hoc projects that we are well-positioned to take on in defense of DeFi can be extremely expensive. For example, we expect the challenge to the oracle patent to cost nearly $500,000 over its entire course. A legal challenge to proposed rules that would de facto ban DeFi in the United States could cost well over $1m. We have no ability to predict with certainty when and if those expenditures will be necessary, and without a sense of our longer term funding situation, we can’t take on those types of unexpected, but critical, projects.

Third, DeFi needs more dedicated advocates working on its behalf. With a larger budget, we can hire more people.

  1. Why are you asking Arbitrum for money and not other DAOs?

We will definitely be passing around the hat! We seek Arbitrum’s support as a leading DAO that is building for the long term. The Uniswap DAO took a massive “leap of faith” in generously funding an organization that did not yet exist to do work that would benefit every DeFi project and DAO. We hope that our track record of work has proven valuable to DeFi projects and users such that other leading DAOs will contribute to funding our work going forward.

  1. When and how are you planning on selling tokens?

It is important to us that the DEF remains aligned with the DeFi community and our supporters over the long term. We will hold half of any ARB tokens we receive for at least 12 months from the date we receive them, and we will not sell any ARB tokens without pre-disclosing a sales plan in writing. For example, we received our initial grant from the Uniswap DAO in July 2021 and sold half of the tokens. In February 2024, we began selling portions of the other half of the tokens according to an 18-month written sales plan. We will sell in July 2025 the last of the UNI tokens we received in July 2021.

ACCOMPLISHMENTS

Legal Advocacy

  • SEC v. Kraken - In February 2024, we submitted an amicus brief explaining the various incorrect and often inconsistent legal positions the SEC employs in its attempts to justify its position that digital asset transactions are securities transactions.
  • Van Loon v. Treasury - In November 2023, we filed another amicus brief related to the Tornado Cash sanctions in the U.S. Court of Appeals for the Fifth Circuit. We argued that the use of privacy-protecting technology is normal and not inherently illicit and that Office of Foreign Asset Control (OFAC) exceeded its statutory authority in issuing sanctions that included purely domestic transactions.
  • Harper v. Internal Revenue Service - In October 2023, we filed an amicus brief in a case involving a challenge to a “John Doe” summons the IRS sent to Coinbase that resulted in the collection of information (including information revealing on-chain wallet addresses) about 14,355 Americans (none of whom were accused of any wrongdoing prior to the summons) over a three-year period. Our brief explained the sweeping Fourth Amendment implications of indiscriminately collecting digital asset transaction information and how doing so is more revealing than in the context of TradFi.
  • SEC v. Coinbase - In August 2023, we filed an amicus brief in the U.S. District Court for the Southern District of New York in support of Coinbase. We explained how wallets and staking actually work and supported Coinbase’s arguments that it is not a broker through its wallet software, nor did it offer securities through its staking program.
  • Coin Center v. Treasury - In June 2023, we filed an amicus brief in support of a challenge to OFAC’s sanctioning of Tornado Cash smart contracts. plaintiffs’ motion for summary judgment ag. In October 2022, Coin Center and several individuals sued Treasury, challenging OFAC’s designation of Tornado Cash smart contracts. The plaintiffs argued that doing so exceeded the Treasury’s authority, and violated the Administrative Procedure Act (APA) and the First Amendment. Our brief supported arguments that the sanctions were beyond the Treasury Department’s statutory authority and violated the Administrative Procedure Act, made the point that Tornado Cash is an important privacy-protection tool, and argued that the sanctions designations made no sense when considering the realities of the technology at issue.
  • Van Loon v. Treasury - In April 2023, we submitted our first brief related to Treasury’s sanctioning of Tornado Cash smart contracts. In addition to Treasury’s lack of statutory basis for the actions, We argued that the downstream implications of sanctioning a software protocol will lead to not only a weakening of the digital asset industry, but will also seriously jeopardize law-abiding Americans’ financial privacy.
  • CFTC v. Ooki DAO - In late 2022, the Commodity Futures Trading Commission (CFTC) served Ooki DAO, alleging it is “illegally offering leveraged and margined retail commodity transactions in digital assets” without a Futures Commission Merchant designation or a Bank Secrecy Act (BSA) program. The CFTC served “Ooki DAO” via a help chat box with a contemporaneous notice posted on a website purportedly affiliated with Ooki DAO. We filed a brief in the case explaining: “First, the Commission has named Ooki DAO as a defendant in this action, asserting that Ooki DAO is an “unincorporated association comprised of Ooki Token holders.” But nothing about the structure of a DAO inherently dictates that result. In many cases, DAOs lack any central organization or management, and many DAO token holders often lack coordination or common objectives. As a result, DAOs will often not be “associations” of any kind, and therefore will not be proper defendants in an enforcement action brought under the Commodity Exchange Act (“CEA”), which requires that a defendant be a “person” (defined to include “associations”). The Commission has not yet alleged facts sufficient to establish that Ooki DAO is an association, so its attempt to serve Ooki DAO here is premature.”
  • Combatting crypto patent trolls: In September 2023, we took action to protect DeFi and crypto from invalid patent infringement claims. We filed a petition with the U.S. Patent and Trademark Office seeking to initiate an inter partes review and cancellation of all claims in a patent owned by True Return Systems LLC. TRS is a patent troll who first tried to sell the patent as an NFT, and when that didn’t work, sued both MakerDAO and Compound Protocol in federal court for alleged infringement of U.S. Patent No. 10,025,797. Our petition argued that the technology that TRS purported to patent was not in fact TRS’s invention, but was instead very similar to oracle technology that had been in development and use for years prior to the patent.

Regulatory Advocacy

  • In January 2024, we urged the Department of the Treasury to reconsider its proposed rule to classify crypto “mixing” transactions to be a “primary money laundering concern” subject to enhanced reporting requirements. Among the issues we commented on is the proposal’s all-encompassing definition of “mixing,” which would capture almost all crypto transactions and designate them to be “high risk.”
  • In January 2024, we submitted our thoughts on a Consumer Financial Protection Bureau (CFPB) proposed rulemaking that could expand the CFPB’s supervisory authority to capture self-hosted wallets. We argued that the rulemaking should not move forward as it would further scramble the Federal government’s already-convoluted regulatory treatment of DeFi and crypto-related activities.
  • In November 2023, we filed a comment letter regarding the Treasury Department’s proposed “broker” rulemaking. The proposed rule would introduce a brand new category of broker called a “digital asset middleman,” a new term that is essentially limitless in scope and creates brokers out of thin air in DeFi and, as we argue, runs contrary to the statute and legislative history. Furthermore, we argued that the proposal violates the Fourth Amendment’s prohibition on warrantless searches and seizures of a person’s papers and effects because individuals do not voluntarily turn over their personal data to “digital asset middlemen” who themselves neither collect nor have any legitimate business reason to collect that information. For a plain language review of our issues with the rulemaking, read: “Congress Gets the Runaround From Regulators, Again.”
  • In October 2023, we responded to France’s Autorité de Marchés Financiers (AMF) concerning their DeFi regulatory discussion paper. Our comment letter addressed many topics including permissionless blockchain protocols, legal enforceability of smart contracts, off-chain elements, etc. Importantly, we addressed the legal liability of smart contract developers, arguing that smart contracts’ code is open-source for anyone to audit and make informed decisions. Furthermore, we argued that open-source code is a form of expression as it conveys ideas for societal change and demands protection. We also argued against the AMF’s proposal to create a government-run certification regime for smart contracts.
  • In September 2023, we responded to a request for comment from the Senate Finance Committee regarding the taxation of digital assets. In our submission, we recommended Congress: 1) Revise Section 6050I so that it does not “deputize recipients of digital assets to collect and report information about their payers;” 2) Do not tax staking rewards until a sale or other disposition; 3) Do not apply wash sale rules to taxpayers who utilize digital assets as a form of currency; and 4) explicitly extend the application of section 1058’s nonrecognition rule to “loans” of actively traded fungible tokens.
  • In June 2023, we submitted a response to a consultation from HM Revenue and Customs, the United Kingdom’s tax, payments, and customs authority, regarding “the taxation of DeFi involving the lending and staking of cryptoassets.” At a high-level, our submission noted that any changes to the tax regime that concern DeFi must: be flexible to account for future innovation; exhibit clarity and simplicity to promote compliance by minimizing the burden on taxpayers; and align with the underlying economic substance of a typical DeFi transaction.
  • In June 2023, we submitted a response to Banque of France’s Autorité de Contrôle Prudentiel et de Résolution (ACPR) regarding their discussion paper: “Decentralised’ or ‘Disintermediated’ Finance: What Regulatory Response?” Our primary arguments included that ACPR should not directly regulate miners and validators by establishing standards for public blockchains; a policy that would “force centralization” would eliminate the core innovations of public blockchains; and a framework for smart contract certification would require centralization and the inappropriate regulation of speech.
  • In June 2023, we filed our third comment letter on the SEC’s proposed “exchange” rulemaking. Our brief made two primary arguments: first, the proposal improperly reads and misapplies the Exchange Act and exceeds the SEC’s statutory authority and mandate under the Act; and second, the SEC has flatly failed to comply with numerous procedural and statutory rulemaking requirements.
  • In August 2022, the DEF filed a response to the U.S. Treasury Department’s request for comment on innovation in digital assets. In our response, we explained how DeFi protocols have the potential to benefit consumers, investors, and businesses in the United States and around the world by creating accessible financial infrastructure usable by any individual with an internet connection.
  • In June 2022, we responded to Abu Dhabi’s DeFi consultation, in which we expressed our view that decentralization and disintermediation serve important societal objectives and that forcing the reintroduction of intermediation via legal obligations is a misguided approach to DeFi that would undermine its core potential and innovation.
  • In June 2022, In our second letter on the SEC’s exchange rulemaking, we argued that the proposed rule represents an improperly static regulatory response to a dynamic innovation and therefore needs to be reconsidered in total.
  • In May 2022, we commented on the SEC’s “dealer” rulemaking, which could not only subject large DeFi market participants to the threat of arbitrary SEC enforcement actions but also, potentially, capture liquidity pools themselves as so-called “dealers” under the securities laws. But how would it do so? In what way? The SEC did not say when it proposed the rule nor when it later finalized the rule in early 2024, which we expect to see challenged in court. .
  • In April 2022, we submitted the first of three comment letters on the SEC’s “exchange” rulemaking, which would de facto ban DeFi protocols in the United States. We argued that the Proposal’s expanded definition of an “exchange” is so broad that it could be interpreted to cover DeFi market participants, yet the rule didn’t specify which or why—it didn’t even mention “crypto,” “DeFi,” or “digital assets” once. In January 2023 in response to these concerns, the SEC released 167 pages of additional information explaining that the proposal does apply to DeFi and crypto, which we also responded to.
  • In April 2022, we submitted a comment letter to the Organization for Economic Co-operation and Development (OECD) on its proposed framework for tax reporting in the digital asset ecosystem. Broadly, when it comes to DeFi, the proposal fits squarely in the “how do we apply existing regulations and tactics to innovative systems” camp. This concept would force the creation of intermediaries where they do not exist for tax reporting purposes, a concept that the Treasury Department is now attempting to enshrine in the United States (see November 2023 comment letter on the IRS’s proposed “broker” rulemaking).

Legislative Advocacy

The past year has yielded some fruit in the industry’s push for crypto-specific legislation, but legislation is still a few years out, in our view. In July, The House Agriculture Committee and the House Financial Services Committee (HFSC) voted, with bipartisan support, to advance the Financial Innovation Technology for the 21st Century Act, a bill that would create a regulatory framework for crypto in the U.S. That same month, the HFSC advanced a bill to establish a federal regulatory regime for stablecoins.

More recently, the House Committee on Energy and Commerce passed the Deploying American Blockchains Act (by a 46-0 margin), which would direct the chief of the Department of Commerce “to promote the competitiveness of the United States related to the deployment, use, application, and competitiveness of blockchain technology or other distributed ledger technology.” While these bills are not perfect, we’re pleased that Congress has taken a serious approach to these matters.

There’s another factor that gives us hope for the long-term chances of good legislation passing both chambers. And that is the willingness of Congressional offices and policymakers to engage with DEF and learn about the foundational aspects of the technology. We do “DeFi Demos” on Capitol Hill and advocate for policies welcoming of DeFi and DAOs. We explain why we believe in DeFi and why government officials and elected representatives should be just as curious as we are as to how this technology can improve the lives of their constituents. Away from sensational media headlines and televised hearings, one can see that a better, more open future for DeFi is developing.

Specifically, we’ve provided a perspective from DeFi’s corner on the following federal legislation:

  • H.R. 1122, CBDC Anti-Surveillance State Act
  • H.R. 1177/S. 427, Financial Freedom Act of 2023
  • H.R. 1414. Keep Innovation in America Act
  • H.R. 1747: Blockchain Regulatory Certainty Act
  • H.R. 2670, National Defense Authorization Act for Fiscal Year 2024, including provisions related to Amendment 44
  • H.R. 2743/S. 293, Fair Access to Banking Act
  • H.R. 2891/S. 1323, Secure and Fair Enforcement (SAFE) Banking Act of 2023
  • H.R. 2969/S. 1340, Financial technology Protection Act of 2023
  • H.R. 3572, Securities Clarity Act
  • H.R. 4664, Making appropriations for financial services and general government for the fiscal year ending September 30, 2024, and for other purposes
  • H.R. 4763, Financial Innovation and Technology for the 21st Century Act
  • H.R. 4766, Clarity for Payment Stablecoins Act of 2023
  • H.R. 4841, Keep Your Coins Act of 2023
  • H.R. 5403, CBDC Anti-Surveillance State Act
  • H.R. 5741, Uniform Treatment of Custodial Assets Act
  • H.R. 6307, Creating Legal Accountability for Rogue Innovators and Technology (CLARITY) Act of 2023
  • H.R. 6322, End Financing for Hamas and State Sponsors of Terrorism Act
  • H.R. 6572, Deploying American Blockchains Act of 2023
  • S. 661, Crypto-Asset Environmental Transparency Act of 2023
  • S. 695, A bill to repeal the provisions of the Infrastructure Investment and Jobs Act that impose new information reporting requirements with respect to digital asset transfers
  • S. 1357, Responsible Digital Asset Advertising Act of 2023
  • S. 2226, National Defense Authorization Act for Fiscal Year 2024, including provisions related to Senate Amendment 326 and Senate Amendment 1087 to Senate Amendment 935
  • S. 2281, Lummis-Gillibrand Responsible Financial Innovation Act
  • S. 2355, Crypto-Asset National Security Enhancement and Enforcement Act of 2023
  • S. 2597, Digital Consumer Protection Commission Act of 2023
  • S. 2669, Digital Asset Anti-Money Laundering Act of 2023
  • S. 3087, Proving Reserves Of Others Funds (PROOF) Act
  • S. 3441, Terrorist Financing Prevention Act of 2023

Voice for DeFi: Selected Op-Eds

Providing DeFi’s Perspective in the Media

  • The Defiant: Crypto Advocates See Coinbase’s SEC Hearing as a “Step Forward”

    • A spokesperson from the DeFi Education Fund (DEF), a DeFi-focused research and advocacy group, told The Defiant the hearing was “a step forward.” “On wallets and staking, the court rightly noted the paucity of factual allegations in the SEC’s complaint, and we were happy to hear that our amicus brief on these issues was useful in the court’s understanding of them,” the spokesperson said.
  • DL News: Coinbase lashes out against regulator’s bid to ‘grab jurisdiction’ over crypto — and it’s not the SEC

    • “Regulatory agencies — the CFPB included — are trying to grab jurisdiction in a way that creates statutory contradictions,” Miller Whitehouse-Levine, CEO of the DeFi Education Fund, told DL News.
  • Cointelegraph: A taxing obligation: Is crypto reporting ‘impossible’ under US law?

    • “At the moment, it is literally not possible to comply with the reporting requirement,” Miller Whitehouse-Levine, CEO at the DeFi Education Fund, told Cointelegraph. What’s needed instead for the 60 million Americans who own digital assets today are “fit-for-purpose tax provisions” that basically regard crypto as a different sort of case.
  • Law360: USPTO To Review Blockchain IP Used To ‘Troll’ Crypto Firms

    • The challenge has been led by the DeFi Education Fund, a crypto advocacy group that says that the technology the patent covers predates the patent itself and has called True Return Systems a “patent troll” that threatens to force anyone using oracle systems to pay. On the same day in 2022, True Return Systems brought two suits against what amount to technology programs, arguing that they were infringing on the True Return Systems patent.
  • Bankless Podcast: The US Government is Trying to Kill Crypto

    • We need to stop the US from killing crypto. The new IRS proposals could effectively destroy DeFi and other crypto use cases. The good news? We can change this. 5 minutes is all it takes to leave a comment and get the interpretation delayed. In this episode, we bring on Miller Whitehouse-Levine of the DeFi Education Fund and tax lawyer Jason Schwartz to discuss the proposed rules and their catastrophic implications.
  • Law360: Crypto Group Urges 1st Circ. To Revive IRS Doc Seizure Suit

    • A New Hampshire federal court failed to understand the distinctive features of cryptocurrency technology when it determined that the seizure, issued by John Doe summons, did not violate James Harper’s Fourth Amendment right to privacy, DeFi Education Fund argued in an amicus brief. DeFi is a research group that advocates for the benefits of decentralized finance, including cryptocurrency.
  • Decrypt: Taxes Targeting DeFi Would be ‘Awfully Challenging’: Coinbase VP

  • Today, Washington, D.C. nonprofit Defi Education Fund said on Twitter that “the proposed ‘broker’ rulemaking… must be stopped” because it would raise “serious tax policy and privacy concerns.”

  • Cointelegraph: Crypto advocates file amicus brief to address users’ Fourth Amendment privacy rights

  • Cryptocurrency advocacy group the DeFi Education Fund (DEF) has urged a United States court to consider the unique aspects of blockchain technology when evaluating the privacy rights of cryptocurrency users under the Fourth Amendment of the U.S. Constitution.

  • Law360: DeFi Org Asks USPTO To Review Blockchain IP Held By ‘Troll’

  • Crypto advocacy group the DeFi Education Fund has asked the U.S. Patent and Trademark Office on Monday to take a look at a patent held by a firm it said is “trolling” decentralized finance entities with lawsuits over a blockchain system the group claims is “indistinguishable” from solutions that came before it.

  • Law360: CFTC Enforcement Cases May Force DeFi To Comply Or Leave

  • The DeFi Education Fund advocacy group said in a statement to Law360 that the CFTC enforcement actions “completely reject” the New York court’s finding…“The CFTC’s enforcement actions yesterday completely reject the court’s decision in Risley v. Uniswap Labs, which found that it ‘defies logic’ to hold the developer of a DeFi protocol liable for a third party’s potential misuse of that software,” the DeFi Education Fund said.

  • DL News: The Guidance: A peak into lobbyists’ agenda

  • While the stablecoin and market structure bills are front of mind, for the DeFi Education Fund, Senator Elisabeth Warren and Senator Roger Marshall’s bill on anti-money laundering provisions for digital assets is the priority…“What they propose to essentially do is make miners and validators financial intermediaries for regulatory purposes or software developers,” Miller Whitehouse-Levine, CEO of the Fund, told DL News. “So it’s highly problematic and certainly would kill the industry in the United States." But Whitehouse-Levine is hopeful because “everyone’s objective is the same, it’s just a matter of accomplishing how this objective is going to work.”

  • Bloomberg: Treasury Aims to Snag Tax Cheats With Crypto Broker Proposal

    • “Today’s proposal from the IRS is confusing, self-refuting, and misguided,” said Miller Whitehouse-Levine, chief executive officer of the DeFi Education Fund.
  • The Wall Street Journal: U.S. Tackles Crypto Tax Mess

  • “It attempts to apply regulatory frameworks predicated on the existence of intermediaries where they don’t exist.”

  • Reuters: Biden administration unveils new crypto tax reporting rules

  • Miller Whitehouse-Levine, CEO of the DeFi Education Fund, a lobbying group focused on decentralized finance, said the proposed approach would neither make filing taxes easier nor improve tax compliance.

  • CoinDesk: U.S. Senator Lummis, Crypto Lobbyists Urge Court to Dismiss SEC’s Coinbase Lawsuit

  • In total, lobby organizations including the Blockchain Association, Crypto Council for Innovation, Chamber of Digital Commerce, DeFi Education Fund, Chamber of Progress, Consumer Technology Association, venture firms like Andreessen Horowitz and Paradigm and half a dozen academics filed a total of six briefs, not including the Senator’s.

  • Blockworks: DeFi Education Fund seeks FOIA amid SEC inaction on securities dispute

  • The DeFi Education Fund recently utilized the Freedom of Information Act to file a request for additional information regarding the Securities and Exchange Commission’s decision not to provide clarity on the classification of syndicated loans as securities.

  • POLITICO: What’s that cloud look like? To Chopra, stability risk

  • “He previously tweeted about being pro-innovation and wanting to keep development of this industry onshore,” DeFi Education Fund CEO Miller Whitehouse-Levine told MM. “Given the contents of the bill, I do think his position has apparently changed.”

  • The Block: Senate bill would tighten money laundering and sanctions rules for DeFi

  • The bill would “effectively ban DeFi development in the country,” argued Miller Whitehouse-Levine, CEO of the DeFi Education Fund, in a statement decrying the legislation. “Unfortunately, this approach is not only a disproportionate response to the illicit use of DeFi but also risks undermining US law enforcement’s existing insight and reach into peer-to-peer crypto activity,” Whitehouse-Levine said.

  • Blockworks: SEC’s proposed exchange definition would cause ‘de facto expatriation’ of DeFi companies

    • “The upshot of this technological reality is that holding DeFi protocols to the requirements of the regulatory regimes governing national securities exchanges and ATSs would result in their de facto expatriation from the United States. DeFi is rapidly gaining trading market share in crypto assets, especially after recent and high-profile fraud and compliance issues at leading centralized and intermediated non-U.S. crypto asset exchanges,” the DeFi Education Fund (DEF) wrote in a 47-page response letter.
  • CoinDesk: U.S. SEC Out-of-Bounds in Dragging DeFi Into Proposed Exchange Rule, Industry Says

  • “The proposal would operate as a blanket de facto banishment of DeFi from the United States,” the DeFi Education Fund, a lobbying group, wrote in its comment letter. “The actions and words of the commission and agency personnel have created great confusion.”

  • The Capitol Account: Talking `Impact’ Litigation; SEC Officials on Hotseat in House; Stepping up Merger Scrutiny; Banks Bash SEC Custody Plan

  • Amanda Tuminelli, who is the new chief legal officer at the DeFi Education Fund, thinks there is probably a better way to get answers – in court. Her role at the decentralized finance advocacy group is to spearhead “impact litigation” designed to bring more clarity about the rules digital assets need to follow. And even though she’s only been on the job since March, Tuminelli already has a few targets in mind. (SEC Chair Gary Gensler may want to watch out.)

  • Axios: U.S. Treasury looks at DeFi and crime

    • “Those frameworks were developed based on how the global economy worked in the 1970s, and are predicated on the assumption that transactions must occur through custodial financial intermediaries,” DeFi Education Fund CEO Miller Whitehouse-Levine said in a statement.
  • POLITICO: DeFi’s turn in the barrel

    • “DeFi protocols function in a different way than traditional finance, and trying to apply existing AML/CFT rules, isn’t going to accomplish AML/CFT objectives,” DeFi Education Fund policy director Miller Whitehouse-Levine told MM.
  • Blockworks: Treasury Review Acknowledges Traditional Finance, Not DeFi, Preferred by Criminals

    • “While the assessment does, at times, demonstrate a sophisticated understanding of the DeFi landscape, it evidences a tension between the idea that decentralization is irrelevant in determining compliance obligations under existing AML/CFT controls and the idea that decentralized protocols are a novel tool unanticipated by existing frameworks,” Miller Whitehouse-Levine, CEO of the DeFi Education Fund, said in an email.
  • The Defiant: Gensler Refuses To Call Ether A Security At Congressional Hearing

    • Miller Whitehouse-Levine, who heads the DeFi Education Fund crypto advocacy group, said Gensler’s appearance “underscores the thesis that [he] has made the policy choice to try and ban crypto in this country.”
  • The Defiant: “Everybody” Should be Concerned About the SEC’s Proposed Rule Change for DeFi

    • “Everybody and their mother,” should be concerned, Whitehouse-Levine said in an interview. Validators of blockchain transactions, members of DAOs, and open source developers, are potentially liable, he said. The DeFi Education Fund is a research firm which advocates for DeFi with policy-makers.
  • Capitol Account: Grading Gensler: Advocates Assess SEC Chief Two Years In

    • Top line: F- [grade]. Chair Gensler has morphed the SEC from being the gold standard of financial regulators – an agency that protects American investors and the primacy of its capital markets by adapting its statutorily-authorized regulations to innovative technologies – to being an agency that actively engages in merit-based policymaking. That approach is undermining the SEC’s pursuit of its mission and its credibility already. And in turn, it risks doing lasting damage to the agency and the markets it oversees.
  • The Block: Fighting a digital dollar becomes new conservative crypto cause to champion

    • “A CBDC’s potential for misuse is quite potent. It could severely encroach on Americans’ right to financial privacy and enable an unprecedented degree of control over individuals’ private transactions,” Whitehouse-Levine said. “Protecting the right to financial privacy is a non-partisan issue.”
  • Reuters: Wall St watchdog shortens time-frame for stock trades, proposes new investment adviser rules

    • However Miller Whitehouse-Levine, policy director at DeFi Education Fund, described Gensler’s position as an attempt to cut off digital assets from the traditional financial system. “This should end any doubt that ‘come in and register’ is a fig leaf for the SEC usurping Congress to block crypto in the U.S.,” he said.
  • New York Times Dealbook: Investors Await a Momentous Inflation Report

  • The left-right divisions run deep. Despite a shared sense of urgency, the gulf between party leaders on the details of any approach to crypto regulation is wide, said Miller Whitehouse-Levine, policy director of the DeFi Education Fund, a crypto lobbying group. “It’ll be a lot of work to get consensus,” he said, and he doesn’t foresee legislation passing any time soon.

  • Capitol Account: Calling SEC Investor Rule Discriminatory, House Republicans Plot Fresh Push to Open Up PE and Hedge Funds to the Masses

  • Here’s a response from Miller Whitehouse-Levine, the DeFi Education Fund’s policy director: “The blog post is mistitled. The potential (further) broad decline in digital asset prices, the potential composition of custodial stablecoin reserves, and the potential mass use of a digital asset for payments are not DeFi issues.”

  • Cointelegraph: Blockchain privacy groups urge new US Congress to protect privacy rights

    • At the time of writing, the letter had 36 signatories, including industry players such as the Blockchain Association, DeFi Education Fund, Ledger, Nillion Network, Protocol Labs and Proton.
  • Capitol Account: Crypto Turf Fight: a Progressive Attack on CFTC’s Behnam Gets Personal – and Ugly

    • As the head of the DeFi Education Fund, Miller Whitehouse-Levine often notes that he spends much of his time explaining to confused lawmakers what his industry does. Toward that end, the group isn’t wasting any time getting its education efforts going with the new Congress. Today, it sent a letter to every senator and House member that included a “DeFi FAQ,” and encourages them to pass legislation that recognizes the benefits of decentralized finance. You can read the note here.
  • TIME: A Crypto Reckoning Isn’t Coming Yet

    • But Miller Whitehouse-Levine, policy director of The DeFi Education Fund, told TIME in a phone interview two weeks ago that “I don’t think this hearing is indicative of momentum behind the DCCPA. If anything, I think it has added much more to think about in the next few months.”
  • The Block: Crypto industry protests against Treasury’s proposed tax reporting regulation

    • The Defi Education Fund said earlier this month in its letter that the proposal stretches the definition of a broker beyond its constitutional limits and that the Treasury is essentially creating a new kind of broker called a “digital asset middleman.” The proposed regulations’ definition of ‘digital asset middleman’ is vague to the point of being unintelligible,” Miller Whitehouse-Levine and Amanda Tuminelli — CEO and chief legal officer of advocacy group the DeFi Education Fund respectively — wrote in a letter to the IRS.
  • Fortune: The obscure DAO at the center of a case that could determine the future of crypto

    • “These are questions of fairness and liability that are generally handled via state law,” said Miller Whitehouse-Levine, policy director at DeFi Education Fund.
  • The Lexcon Crypto Show: Was the CFTC right to sue Ooki Dao? Hear from Miller Whitehouse-Levine of DEF

    • Miller Whitehouse-Levine of the DeFi Education Fund joins Andrew in the studio today to discuss the latest news and activity of the DEF.
  • The ReFi DeFi Podcast: The DeFi Education Fund

    • It’s clear that US regulators are shining a spotlight on DeFi. It’s essential that we have a group that is dedicated to educating policymakers and shaping the future of DeFi. In this episode, we had the honor to speak to Miller Whitehouse-Levine, Policy Director at the DEF.
  • The New York Times’ Dealbook: Warning Signs Multiply Ahead of Pivotal Fed Interest Rates Meeting

    • The issue has sparked a feud among crypto insiders. “Decentralization is a spectrum, and where the line is drawn between centralized and decentralized is a policy choice that Congress will eventually have to make,” said Miller Whitehouse-Levine of the DeFi Education Fund.
  • The Capitol Account: DeFi Advocate Talks Hacks, Fraud and How His Industry Can Revolutionize Finance

    • This week we chatted with Miller Whitehouse-Levine, the policy director of the DeFi Education Fund. An early crypto enthusiast, he may have one of the hardest jobs in Washington: explaining to confused lawmakers and regulators what decentralized finance is – and why they shouldn’t be afraid of it.
  • Decrypt: CFTC Sues a DAO, Raising Legal Questions for DeFi Founders and Users

    • In an emailed statement to Decrypt, the DeFi Education Fund called the lawsuit against Ooki DAO an “unprecedented action [that] seeks to create novel policy in response to novel issues, all via an enforcement action.”
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While I generally am supportive of these kind of efforts, I’d like to highlight that politicians all around the world need education about crypto, not just in the US. As I understand this is a general DeFi Education Fund, not just a " DeFi Education in the US " fund, hence I would like this squad to consider expanding their scope to other major jurisdictions.

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gm. I’ve been following Defi Education Fund’s work for a while, and I’m a huge fan of it.

Could you please open access to these documents?

Thanks!

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i’d note from a game-theory point of view, this is an arms race with TradFi (as Le⚔DAO is guild of legal engineers we track this, esp ith BIS stablecoins and FSB. The only way to win is not to play … what this means is coming halfway and offering co-regulation (they obviously refuse to believe DeFi after FTX (d)efective altruism. This falls into categories like public-private partnerships, subordinate legislation, public scrutiny of protocols. There are some disturbing outcomes LexDAO would want to avoid

The suboptimal one is in code(rs) we t(h)rust where programmers are deemed fudiciaries and held responsible for their code (you guess where this is going with skynet). This is fundamentally unjust as you are asking one cog to understand the whole complex system.

The Szabo approach of just technical updates is heavily criticised by Zamfir (hum’in’loop) and this is the current position with every regulatory body out there with license to thrill (financial theatre) after Terra-bomb and FTX.

I’m sure some advocacy won’t hurt but are funds better spend on actual compliance rather than stonewalling?

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Apologies. Those were just anchors (table of contents) links in the original document where this was drafted. We have removed them. All the information should be in that section.

You can also view additional information about some of this past work here.

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Thank you GFXLabs for putting together this proposal! For some context: last year, we worked with GFX (based in Chicago) stopping a bill proposed in the Illinois state legislature that would have inadvertently killed DeFi/p2p development in the state. It was one of the many state-level proposals that are just as problematic are many federal proposals.

We would love to host a call next week to share our work, answer questions, etc (Tuesday at 3:30pm ET) if that would be of interested to folks?

(also, we filed a brief this morning in US v. Roman Storm: The indictment presents a fundamental question with vast implications for software developers in every industry: “when should software developers be held criminally liable for the bad acts of third parties who misuse their software?” According to the government’s theory in the indictment software developers would be criminally liable for the conduct of third parties who use their software years after its creation.

We urge the court to reject such a sweeping—and revolutionary—view of the law, as the theories of liability in this case “would grant the government unlimited power to prosecute any software developer who writes code that is later used by a third party for nefarious purposes, merely because the developer becomes aware of that later use. With no limiting principle in place, nearly all developers who create open-source software would be exposed to criminal liability for activity outside of their control years or decades later.”)

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I understand that the US is the largest player in crypto.
But I consider it incorrect to concentrate all efforts and resources on only one country.

Regarding the legal protection of the crypto space, there was recently a proposal to provide financial support for the legal costs of the trial of the Tornado programmers. But for some reason we were afraid to even discuss it and deleted the article and the vote.
Let’s start with protecting ordinary programmers, otherwise then there will be no one to make DeFi applications

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Defi Education Fund filed this in court today in the United States vs Roman Storm et al case. They also were in court last year around the OFAC designation for TC.

The DEF is pretty actively involved in a number of cases the US government has brought against DAOs or their contributors.

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Thanks, this gives me hope!

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Rather than seeing proposals like this one and the one supporting coin center floated individually, I would much rather see an approved budget, an open call for applications and then ARB voters getting to decide who gets how much.

Otherwise it’ll be death by a thousand cuts, with each new advocacy group coming and posting a request. This isn’t a knock on the DEF, which i think is fabulous. I don’t agree with the criticism of US centricity, unfortunately the way the world is right now, as goes the US so goes the world.

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Agree with open call for applications and then ARB vote

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I’d say open call for applications with eligiblity being filing an amicus curiae brief in the Tornado cash case

If number of applicants is 3 or less we can just divide equally without an ARB vote

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