Bankless Does the FinCEN's Rule Break DeFi? | Jake Chervinsky
Dec 22, 2020
Jake Chervinsky, Chief Legal Officer at Compound Labs and an expert in cryptocurrency law, dives into FinCEN's proposed regulations that could change the landscape for crypto custodians. He discusses the potential compliance burdens on exchanges and the implications for user privacy and autonomy in decentralized finance. Chervinsky emphasizes the urgent need for clarity in regulations and encourages active public engagement to influence policy. The conversation highlights the tension between innovation in crypto and the growing reach of government oversight.
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Uncertainty in Verification
- The rule requires exchanges to verify customer information but not counterparty information.
- This uncertainty may lead to de-risking, where exchanges disallow certain transactions.
Final Boss Arrives
- This rule isn't as bad as it could have been, like Switzerland's arduous process or an outright ban on self-custody.
- However, it represents the "final boss" of regulation entering the crypto space.
Smart Contract Concerns
- The proposed rule impacts simple withdrawals, but its effect on withdrawals to protocols or DAOs without physical addresses is unclear.
- This ambiguity might "break smart contracts."