Democrats Target Risky DeFi, Sparking Innovation Concerns

U.S. Democratic senators are pushing for stricter oversight of decentralized finance, proposing measures that could significantly alter the regulatory landscape. The plan empowers the Treasury Department to flag high-risk DeFi protocols, potentially barring Americans from profiting off them. It also mandates know-your-customer checks for non-custodial wallet interfaces and strips legal safeguards from crypto developers.

The MOVE reflects growing government scrutiny of DeFi's Wild West environment. While proponents argue such oversight protects consumers, critics warn it may stifle the very innovation that makes decentralized finance transformative. The proposal marks a pivotal moment for an industry that has operated largely outside traditional financial regulations.