The DeFi Education Fund seeks proposals to complete an analysis of current financial laws' and regulations' policy objectives in order to clearly convey to policymakers and regulators which risks DeFi protocols inherently address. Responses to this RFP may be submitted through our grant application form or via email to [email protected].

Objective

Analyze the public policy objectives and concerns underlying current financial law and regulation and how/whether those concerns are addressed by decentralized financial protocols.

Deliverable information and format

Provide a written analysis of the public policy objective underlying financial laws and regulations (details below).

Simplified examples:

Broker-dealers are required to oversee their employees (regulation) so that employees do not steal funds (policy objective addressing underlying risk).

FDR called for passage of the 33 Act (law) and the disclosure regime because “the public in the past has sustained severe losses through practices neither ethical nor honest on the part of many persons and corporations selling securities… To insist… that no essentially important element attending the issue shall be concealed from the buying public… What we seek is a return to a clearer understanding of the ancient truth that those who manage banks, corporations, and other agencies handling or using other people's money are trustees acting for others” (policy objective addressing underlying risk).

How this work product will be used

An understanding of existing laws' and regulations' policy objective will allow for a detailed, precise, and concrete explanation of how decentralized financial protocols inherently address many of the risks the existing regulatory framework attempts to address in the traditional financial ecosystem.

Simplified examples:

When a DeFi protocol has no access to or control over user funds, then there is no need for a regulation or rule requiring oversight of employees because the policy objective of preventing the misuse of customer funds is inherently addressed. On the other hand, however, if a DeFi protocol allows funds to be taken, by multi-sig or otherwise, then the same laws should apply.

Preliminary list of laws and regulations for analysis

Securities Act of 1933

Issuer registration requirements

Securities Exchange Act of 1934 and implementing regulations

Broker-dealers registration requirements and substantive regulations

NSEs

Investment Advisers Act of 1940 and implementing regulations

Investment Company Act of 1940 and implementing regulations

FINRA rules

Commodity Exchange Act and implementing regulations

FCMs

Trading facilities, DCMs

SEFs

Derivative contracts

Commodity trade adviser/commodity pool operators

Bank Secrecy Act/IRS reporting