Shielding DeFi Infrastructure Builders: A Crucial Step Forward

Welcome to Crypto Long & Short, our institutional newsletter. This week, we explore key issues in the DeFi space. Alexandra Levis shares expert insights, starting with Jennifer Rosenthal, who emphasizes the need to protect those building DeFi infrastructure. As traditional finance companies increasingly engage with DeFi, it's crucial to defend the principles that make this technology valuable. The DeFi Education Fund, a nonpartisan nonprofit, invites all to join in protecting the technology and infrastructure that underpin DeFi. High-level policy objectives include safeguarding software developer protections, which have been a topic of discussion in recent market structure and crypto policy talks. A bipartisan bill, the Promoting Innovation in Blockchain Development Act of 2026, aims to protect software developers from misclassification under criminal code. This legislation clarifies that certain regulations apply only to those controlling customer assets and transmitting funds on their behalf. In a separate piece, Alexis Sirkia discusses Ethereum's scaling issues, arguing that the rollup model was flawed from the start, focusing on throughput rather than the true constraint: how value moves between participants. State channels offer a solution by enabling peer-to-peer transactions off-chain, with the base layer serving as an enforcement mechanism. The industry's response to bridge exploits has been misguided, focusing on building better bridges rather than addressing the fundamental issue of intermediaries. As the market shifts towards regulated venues, infrastructure that can settle cross-chain in real time without custodial chokepoints will be essential. Headlines this week highlight the growing connections between traditional finance and crypto, as well as the devastating impact of smart contract exploits.