The Week in Crypto Policy: Decentralization & Policy Considerations

This week, we asked Rashan Colbert, Head of Policy at dYdX, to help break down DeFi and key considerations for policymakers.

dYdX Interview: Decentralization & Policy

From the IRS's recently proposed tax rules for digital asset "brokers" to legislative efforts to combat illicit finance, policymakers are grappling with how to regulate decentralized networks, particularly when it comes to decentralized finance ("DeFi").

While laws written for traditional finance presume a heavy reliance on centralized intermediaries, DeFi's fundamental value proposition is that it reduces or eliminates the very need to rely on - or trust - a central intermediary (e.g., an FTX). As such, DeFi raises novel and unique challenges for Members of Congress and regulators.

The interview below aims to shed more light on DeFi and key related policy concerns.

It has been edited for formatting purposes only (e.g., certain portions are bolded for emphasis).

Interviewee Background