Safeguarding DeFi Infrastructure Builders

Welcome to our institutional newsletter. This week, we focus on the need to safeguard the people building DeFi infrastructure. As traditional finance companies increasingly embrace DeFi-related initiatives, it's crucial to protect the technology and infrastructure that make it valuable. The DeFi Education Fund, a nonpartisan nonprofit organization, invites you to join us in defending key policy objectives. Recently, the bipartisan Promoting Innovation in Blockchain Development Act was introduced to protect software developers from misclassification under criminal code. This bill clarifies that certain regulations apply only to those controlling customer assets, providing long-overdue legal clarity and protecting innovation. Meanwhile, Ethereum's L2 strategy has been criticized for its limitations, with the rollup model designed around the wrong assumption that the platform's limitation was throughput, rather than how value moves between participants. State channels offer a potential solution by allowing peer-to-peer transactions off-chain, with the base layer serving as the enforcement mechanism. The industry is shifting towards infrastructure that can settle cross-chain in real-time without passing through custodial chokepoints, making rollups less suitable for the task. As the market evolves, it's essential to support legislative and regulatory initiatives that foster clarity, reduce uncertainty, and enable responsible participation across both centralized and decentralized markets.