Lobby Statement of Principles

  1. Educate the Public. Far too much of the DeFi literature presumes technical sophistication. Few regulators, fewer legislators, and even fewer within the general public possess the background necessary to make sense of it. If we want to rally support for an appropriate regulatory regime, we’re going to have to get more people on our side. That can’t happen unless they understand what we can do for them. We commit to educating the allies we need at all levels of society.
  2. Preserve Transparency. Community members trust the blockchain to preserve critical records because blockchains are simultaneously transparent and redundant. Anything that exists on any instance of the blockchain must appear, in identical form, elsewhere. Transparency lets anyone confirm the accuracy of any entry. A regulation that undermined that transparency, in any way, would undermine the integrity of DeFi. We commit to standing strong for the preservation of transparency.
  3. Respect Privacy & Anonymity. Much as our community wants transparency in the transactional record, we value privacy when it comes to transactional substance. Blockchain arose respecting the right to conduct private business without public scrutiny. The reporting requirements we may have to our partners, investors, collaborators, or governments are private obligations for us to fulfill on our own, away from the blockchain. We commit to respecting privacy and anonymity to the greatest extent possible.
  4. Deter Criminality and Fraud. One downside to anonymity is that not everyone operates with the best of intentions. Our community cannot grow and thrive if DeFi becomes a haven for fraud, theft, and money laundering. A reputation for criminality will keep good people from joining us and will motivate damaging government crackdowns. We commit to initiatives designed to deter criminality and fraud.
  5. Assure Safety. All members of the DeFi community, from the most sophisticated veterans to the newest entrants, deserve to know that their holdings are safe. Without that safety, our community’s potential for positive, productive growth is severely limited. We commit to striving for the safety and assurances necessary to make DeFi practical for even the most cautious and conservative participants.
  6. Maintain Technological Nondiscrimination. DeFi, and blockchain technology in general, is still in its infancy. No one knows where the next innovations will originate or what direction they will take the community. Such uncertainty cuts against the grain for those who prefer predictability and control. We commit to keeping the playing field as open as possible to maximize innovation and invite entry.
  7. Reduce Regulatory Complexity and Minimize Compliance Costs. Regulation, by its very nature, imposes costs on everyone forced to comply. The more complicated the regulations, the higher those compliance costs. High compliance costs serve as a barrier to entry, often elbowing out everyone but the biggest, wealthiest players. These costs are also deadweights, diverting potential investments out of productive uses. By way of contrast, low compliance costs imply simple, straightforward, commonsensical regulations that are easy to understand and follow. We commit to working toward clear, comprehensible regulation that impose minimal compliance costs.
  8. Promote Zero Basing. Regulators try to shoehorn every innovation into a pre-existing category. Yet if there’s any basis for debating whether an innovation in finance qualifies as a currency, a commodity, a security, or a collectible, it should be clear that no pre-existing label is a perfect fit. Insisting upon the least-uncomfortable fit will lead to misregulation, prove uncomfortable to the community, and impede future innovation. Appropriate regulations need to be built from scratch (or “zero”). A “zero-based” regulatory body begins with a blank page, rather than with legacy regulations developed in a different context. We will push to build a new body of law, from the ground up, attuned to the unique characteristics of DeFi.

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