How to regulate DeFi? US bipartisan bill: DeFi developers or investors with over $25 million in assets

According to CoinDesk, the bipartisan bill "Cryptocurrency National Security Enhancement Act of 2023" may require DeFi protocols to be regulated similarly to banks.

DeFi Protocols to be Regulated Like Banks

According to a draft legislation reviewed by CoinDesk, the bill aims to crack down on cryptocurrency crimes such as money laundering and sanctions evasion, proposing strict regulations on DeFi protocols similar to those imposed on banks.

The bill plans to impose requirements on those who control DeFi protocols or provide services for their use, such as groups that develop user interfaces for protocols, citing Uniswap Labs as an example of a group that developed a front-end interface for Uniswap.

The proposed requirements include conducting customer due diligence, establishing anti-money laundering programs, reporting suspicious activities to the government, and preventing sanctioned individuals from using their protocols.

Developers and Funders to be Held Accountable for DeFi Protocols

As per CoinDesk, the document states, "If no one controls a DeFi protocol, then as a last resort, anyone who invests over $25 million in developing the protocol will be held accountable."

Furthermore, the bill is also seeking to expand regulatory agencies' authority to combat financial crimes in non-traditional financial areas.