Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the individuals building decentralized finance infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the importance of protecting the people behind DeFi. The DeFi Education Fund, a nonpartisan nonprofit organization, invites you to join them in defending the technology and infrastructure that make DeFi valuable.
Key policy objectives include protecting software developers from misclassification under criminal code. For instance, the Promoting Innovation in Blockchain Development Act aims to clarify that Section 1960 applies only to those controlling customer assets and transmitting funds on behalf of customers. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, comments on Ethereum's scaling problem, arguing that it was never about throughput but rather about how value moves between participants. He suggests that the rollup model was flawed from the start, leading to fragmentation rather than scaling.
State channels, on the other hand, allow participants to transact peer-to-peer off-chain, with the base layer serving as the enforcement mechanism. This approach eliminates the need for intermediaries and could provide a more scalable solution. The market is shifting, with the CFTC preparing to approve the first U.S.
framework for perpetual futures, which will pull a significant share of offshore derivatives volume into regulated venues. The infrastructure that absorbs this volume needs to 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.