Matter

CoinDesk | State of Crypto

During D.C. Fintech Week in Washington, D.C. this past week, I moderated a conversation about how decentralized finance #defi projects could be compliant with different #Regulation 's.

Oxymoron?
The #narrative
Are developers liable for how their projects are used? Can they prevent criminals from using their projects? In other words, is regulation-compliant decentralized finance an oxymoron?

Why it #Matter 's
Developers' liability for how their decentralized projects are used has already been the subject of multiple criminal cases in the U.S. and elsewhere (see, for example, the cases against Tornado Cash developers Roman Storm and Alexey Pertsev). Without getting into the specifics of those cases, there is a broader general question as to how much developers can do to prevent malicious actors from using their projects, and to what extent regulators can design guide rails for DeFi.
I was privileged enough to discuss this with Maha El Dimachki, the head of the BIS Innovation Hub's Singapore Centre, Yaya Fanusie, global head of Policy at Aleo, and Lee Schneider, general counsel at Ava Labs, during a panel at D.C. Fintech Week on Thursday.

#BREAKING it down
Compliance and decentralized finance inherently sound like a contradiction. Users should be able to use a truly decentralized protocol for any purpose, and the project's developers should not have any ability to interfere with these transactions. That's one theory, at least. Another is that developers are or should be required to prevent dangerous actors from taking advantage of their projects.
Developers could and should be able to build in certain tools or features to ensure compliance with certain regulations though, the speakers on this panel seemed to agree, with certain caveats.
The biggest of these caveats is that we need to come up with a specific consensus agreement on how we're defining compliance here.
Fanusie said he would describe developers' obligations more as "risk management," focusing on what issues they might encounter (alleged money launderers or other malicious actors, for example)
Schneider said that another way of describing this is that neither developers nor regulators want users to lose their money (to roughly paraphrase his comments). In that sense, both parties here are aligned in their goals for DeFi.
And El Dimachki, who was previously at the UK's Financial Conduct Authority, said outcome-based policymaking, with regulators looking to prevent malicious activity being the goal of how they could approach rules around DeFi.
There seemed to be general agreement among the panelists that there are steps developers can take to ensure they're not running afoul of regulations, but as always, the devil is in the details.
Obviously this is an ongoing debate, and I'm curious what you all think. I'd love to gather your thoughts on the following questions: 
Is compliant DeFi an oxymoron?DeFi implies global projects. Is it even possible for a truly decentralized project to meet regulatory needs in every jurisdiction it's operating in?If a project is decentralized and open-source, what's to stop a malicious actor from building their own front-end and tapping a protocol for their own purposes? And should developers still hold some form of liability in that scenario?

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Key Takeaways
Two critical roles to fill: BLS Commissioner (economic data) & Fed Governor (interest rates)
Controversial firings: Trump ousted BLS head without evidence of data manipulation
Fed independence at risk: New governor could become "shadow chair", politicizing rate decisions
Market impact: Eroding trust in economic data may increase borrowing costs
1. The BLS Commissioner Crisis
📉 Abrupt firing: Trump dismissed Dr. Erika McEntarfer, accusing her of manipulating jobs data without proof
🔍 Reality check: Recent data revisions were within historical norms, driven by low survey response rates
⚠ Consequences:
Businesses/Fed rely on BLS stats for hiring, investment, and rate decisions
Next appointee faces immediate credibility challenges
Expert warning:
"If a partisan gets the role, trust in economic data collapses." — David Kelly, JPMorgan
2. The Fed Governor Vacancy
💸 Trump’s agenda: Wants a dovish governor to push rate cuts, clashing with Powell’s cautious stance
🎭 Shadow chair risk: New appointee could be groomed to replace Powell in 2026, undermining Fed independence
📊 Market fears:
Politicized rate votes could spook bond investors, driving yields up
Fed’s 2022 inflation fight proved independence matters
Economist’s take:
"I already don’t trust the next Fed chair—and I don’t even know who it is." — Dario Perkins, TS Lombard
Why This Matters
🇺🇸 Tariff experiment: Trump’s trade wars need strong economic faith to avoid inflation spikes
📉 Data distrust: Firing BLS head without cause risks:
Businesses "flying blind" on hiring/investment
Higher Treasury yields = costlier mortgages/loans
💡 Historical lesson: 1970s political meddling in Fed led to stagflation
What’s Next?
🔹 BLS pick: Needs bipartisan Senate confirmation to restore credibility
🔹 Fed nominee: Will they bow to Trump or defend Powell’s policies?
🔹 Market reaction: Bond vigilantes may punish yields if appointments seem political
Updated: August 5, 2025 | Analysis by David Goldman & Matt Egan
Bottom Line: Trump’s appointments could either stabilize confidence or deepen economic uncertainty—with global markets watching closely.
#trum #Tariffs #BTC #economy #Matter