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Unchained

2 Lawyers on How the U.S. Can Finally Regulate DeFi - Ep. 604

Feb 6, 2024
Rebecca Rettig, Chief Legal and Policy Officer at Polygon Labs, and Michael Mosier, co-founder of Arktouros PLLC, dive into the intricacies of regulating decentralized finance. They discuss their innovative paper addressing illicit finance challenges in DeFi, the outdated nature of the Bank Secrecy Act, and the importance of KYC and AML compliance. The duo also differentiates between 'onchain CeFi' and 'genuine DeFi', while proposing solutions like targeting high-risk wallets and utilizing critical communications transmitters for effective regulation.
01:05:02

Podcast summary created with Snipd AI

Quick takeaways

  • Maintaining a neutral and permissionless base layer is crucial for effective financial integrity and combating illicit finance in DeFi.
  • Unique risks of illicit finance in DeFi include cyber risk, system management risk, and usage risk, requiring innovative approaches to address them.

Deep dives

The Need for Neutrality and Permissionlessness in DeFi

The podcast episode discusses the importance of maintaining a neutral and permissionless base layer in DeFi. This is crucial for effective financial integrity and combating illicit finance. The episode highlights the role of RPC nodes as a service, which handle around 80% of DeFi transactions, as a potential gateway for preventing illicit activity without turning them into full-fledged financial institutions. The emphasis is on finding an effective regulatory regime that aligns with the decentralized nature of DeFi.

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