U.S. Senate Proposal Targets High-Risk DeFi Protocols and Crypto Regulations

According to Foresight News, Cointelegraph reports that Democratic members of the U.S. Senate Banking Committee have proposed granting the Treasury Department the authority to list high-risk DeFi protocols as restricted, making their use a criminal offense. The proposal also calls for implementing Know Your Customer (KYC) rules on crypto application frontends, including non-custodial wallets, and reducing legal protections for crypto developers. Crypto attorney Jake Chervinsky criticized the proposal, stating, "This is terrible. It is not regulating cryptocurrency; it is banning it." Zunera Mazhar, Vice President of Government and Policy Affairs at the Chamber of Digital Commerce, described the measures as harsh and ineffective, warning that they could lead to an exodus of innovation rather than addressing actual risks.