{"id":51129,"date":"2025-10-10T08:48:25","date_gmt":"2025-10-10T01:48:25","guid":{"rendered":"https:\/\/hbbgroup.net\/democrats-propose-restricted-list-for-defi-protocols-sparking-outcry\/"},"modified":"2025-10-10T08:48:25","modified_gmt":"2025-10-10T01:48:25","slug":"democrats-propose-restricted-list-for-defi-protocols-sparking-outcry","status":"publish","type":"post","link":"https:\/\/hbbgroup.net\/vi\/democrats-propose-restricted-list-for-defi-protocols-sparking-outcry\/","title":{"rendered":"Democrats propose \u2018restricted list\u2019 for DeFi protocols, sparking outcry"},"content":{"rendered":"
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Despite previously supporting a crypto market structure bill, several Democratic US senators have reportedly introduced a counter-proposal that could see decentralized finance protocols placed on a \u201crestricted list\u201d if deemed too risky. <\/p>\n

This move, among others they proposed, could \u201ckill DeFi\u201d or move it offshore from the US, according to critics. <\/p>\n

The Senate Banking Committee Democrats sent a proposal to the committee\u2019s Republicans on Thursday seeking to impose Know Your Customer rules on the frontends of crypto apps \u2014 including non-custodial wallets \u2014 and to strip protections from crypto developers, Punchbowl News\u00a0reported\u00a0<\/a>on\u00a0Thursday.<\/p>\n

Crypto lawyer Jake Chervinsky said<\/a> the counter-proposal could kill any chance of establishing a crypto market structure framework, noting that it could undermine the bipartisan support the CLARITY Act<\/a> had already secured in the House in July, where it passed 294-134.\u00a0<\/p>\n

\u201cIt\u2019s so bad. It doesn\u2019t regulate crypto, it bans crypto,\u201d Chervinsky said, pointing to a suggested measure permitting the Treasury Department to create a \u201crestricted list\u201d for DeFi protocols it considers too risky. <\/p>\n

Any US national who uses those protocols and makes \u201crecurring revenues\u201d from them may also face punishment, said<\/a> the founder and president of MetaLeX Labs, Gabriel Shapiro.<\/p>\n

Chervinsky said the proposal seemed less like a regulatory framework and more like an \u201cunprecedented, unconstitutional government takeover of an entire industry.\u201d<\/p>\n

\u201dIt\u2019s not just anti-crypto, it\u2019s anti-innovation, and a dangerous precedent for the entire tech sector.\u201d<\/p><\/blockquote>\n

Source: <\/em>Jake Chervinsky<\/em><\/a>
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The Democrats behind the counter-proposal include Mark Warner, Ruben Gallego, Andy Kim, Reverend Raphael Warnock, Angela Alsobrooks and Lisa Blunt Rochester, according to Chervinsky.\u00a0<\/p>\n

The move, which comes amid a government shutdown<\/a>, could be seen as reversing regulatory momentum built under the Trump administration, which has pledged to make the United States the \u201ccrypto capital of the world.\u201d<\/p>\n

Counter-proposal undermines bipartisan RFIA draft<\/h2>\n

It also clashes with aspects of the Senate Banking Committee\u2019s Responsible Financial Innovation Act draft on Sept. 9, a bipartisan effort that seeks to assign the Commodity Futures Trading Commission oversight of spot markets and reduce the Securities and Exchange Commission\u2019s<\/a> overreach.\u00a0<\/p>\n