Future

United

DeFi

Polygon

Security

In a groundbreaking move, Polygon Labs, in collaboration with emergent technology law firm Arktouros, has presented a comprehensive regulatory framework, advocating the classification of decentralized finance (DeFi) protocols as "critical infrastructure" vital to the national and economic security of the United States. The proposed framework, outlined in the 45-page document titled "A Conceptual Framework for Combating Illicit Finance Activity in Decentralized Finance," suggests oversight by the U.S. Treasury's Office of Cybersecurity and Critical Infrastructure Protection (OCCIP). 
The paper underscores the importance of distinguishing truly decentralized DeFi protocols from those with significant centralization points. While the OCCIP isn't a financial regulator, it plays a pivotal role in coordinating efforts to bolster the security of critical infrastructure in the financial services sector. Notably, the proposed framework aims to create a new category of "critical communications transmitters" integral to genuine DeFi systems, subject to specific obligations safeguarding national and economic security.
However, the authors acknowledge the existence of non-decentralized DeFi protocols, emphasising the necessity of subjecting them to existing financial regulations. The framework also differentiates between centralized finance (CeFi) or <a href="https://www.coingabbar.com/en/crypto-blogs-details/defi-platforms-need-tradfi-experience" title="DeFi" class="f-link" rel="noopener noreferrer nofollow">TradFi</a>, aligning with FinCEN guidance for independent control.
Industry expert Jake Chervinsky highlighted that policymakers in Washington DC are increasingly prioritising concerns about illicit finance over other aspects of the digital asset industry. This shift could mark the beginning of a substantial solution to address regulatory challenges.
While the proposed framework addresses urgent issues related to illicit activities, the authors emphasise the need to balance this by empowering positive activities, aligning with the Treasury's mandate of promoting economic prosperity and ensuring the financial security of the United States.
<h3 id="span-span-data-font-font-size-style-font-size-16px-future-perspective-for-regulatory-framework-span-span">Future Perspective for Regulatory Framework</h3>
The proposed regulatory framework signals a potential shift in the regulatory landscape for DeFi in the U.S., reflecting a growing awareness of the sector's critical role. If implemented, this framework could pave the way for a more nuanced approach to DeFi oversight, fostering innovation while addressing national security concerns. Industry participants are likely to closely monitor developments, with the potential for this initiative to set a precedent for regulatory frameworks in other jurisdictions, shaping the future trajectory of decentralized finance on a global scale&nbsp;and <a href="https://www.coingabbar.com/en/crypto-currency-news/ioscos-global-approach-to-navigate-defi-challenges" title="TradFi" class="f-link" style="font-size: 16px; background-color: rgb(255, 255, 255);" rel="noopener noreferrer nofollow">addressing DeFi challenges</a>.
Also Read:&nbsp;<a href="https://www.coingabbar.com/en/crypto-currency-news/okx-boosts-web3-with-new-token-support" title="Web3" class="f-link" style="background-color: rgb(255, 255, 255);" rel="noopener noreferrer nofollow">Empowers Web3 Adoption with 4 New Inscription Tokens</a>

Polygon Labs Advocates for DeFi as Critical to US Security

Table of Contents

Coingabbar

Other articles published on Jan 30, 2024

Global NFT market sees a 22% dip in sales, yet Trump NFTs continue to soar

Monthly Bitcoin ETF Tracker: Analysing Market Performance

Top Crypto Gainers Today Jan 30 – Jito, Bittensor, Worldcoin, Decred

Charles Hoskinson Dismisses Cardano’s ADA Drop Prediction

Why DeeStream (DST) Is Predicted To Be The Best Investment of 2024 Over Cardano (ADA) and Litecoi...

Defendant Pleads Guilty to Drug Related Charges, Forfeits $150 Million Worth of Cryptocurrency

Join our free newsletter for daily crypto updates!