Month: February 2024

House Republicans fail in effort to impeach the Homeland Security Secretary. Nikki Haley loses to None of the Above. Putting abortion on Florida's ballot. CBS News Correspondent Steve Kathan has today's World News Roundup.

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The co-authors of a new paper discuss how to block illicit activity without turning neutral software into financial institutions. 

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Trying to regulate DeFi is a huge challenge because in a truly decentralized system, there should be no centralized actors to make and enforce rules for. This could make combating illicit finance challenging since traditionally, regulation has been targeted at centralized intermediaries. Yet Rebecca Rettig, Chief Legal and Policy Officer at Polygon Labs; Michael Mosier, the co-founder of boutique law firm Arktouros; and Katja Gilman, senior lead for public policy at Polygon Labs, published a paper last week that proposes to do just that. 

Rettig and Mosier join Unchained to discuss what prompted them to write the paper, what the difference is between "onchain CeFi" and "genuine DeFi," how targeting high-risk wallets can be one part of the solution, how critical communications transmitters (CCTs) are another piece of the puzzle, and what next steps they are pursuing. 

Show highlights | 

• The motivations behind their paper and Michael and Rebecca’s legal backgrounds
• Why Michael views the Bank Secrecy Act as outdated in the context of DeFi
• How critical KYC and AML compliance is for the integrity of DeFi
• What Rebecca identifies as the principal risks in the DeFi sector
• Why their proposal target the protocol layer for effective DeFi regulation
• How "onchain CeFi" differs fundamentally from "genuine DeFi"
• Whether a decentralized protocol can be effectively regulated when controlled by a DAO
• How if DeFi were to be classified as critical infrastructure by the Cyber and Information Security Agency (CISA), it would impact the sector
• Whether the critical components of blockchain networks, such as RPCs, can be regulated effectively
• How categorizing wallets based on risk can be one part of the solution to fighting illicit finance
• Why Rebecca considers Tornado Cash a prime example of “genuine DeFi”
• What steps Rebecca and Michael plan to take next following the publication of their paper

Thank you to our sponsors!  Popcorn Network  |  Polkadot

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Guests | Rebecca Rettig, Chief Legal and Policy Officer at Polygon Labs

Previous appearances on Unchained:

Just a Coincidence? Coinbase and Polygon Lawyers See Bad Omens in SEC Crackdown

Kik’s Surprising Move in Its Lawsuit With the SEC

Michael Mosier, cofounder of Arktouros PLLC

Links | 

Previous coverage of Unchained on the topic: Could the Bank Secrecy Act Harm Crypto? Coin Center Thinks So 

Full paper: Genuine DeFi as Critical Infrastructure: A Conceptual Framework for Combating Illicit Finance Activity in Decentralized Finance

Rebecca’s thread

Coin Center: Broad, Ambiguous, or Delegated: Constitutional Infirmities of the Bank Secrecy Act

Tornado Cash

Unchained: Given the Sanctions on Tornado Cash, Is Ethereum Censorship Resistant?

Illicit funds in crypto:

Unchained: How Much Money Are Terrorists Actually Raising in Crypto?

Rebecca Rettig, Chief Legal and Policy Officer at Polygon Labs

Michael Mosier, Cofounder of Arktouros PLLC

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Unchained Podcast is Produced by Laura Shin Media, LLC.  Distributed by CoinDesk. Senior Producer is Michele Musso and Executive Producer is Jared Schwartz.

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Secretary of State Antony Blinken lands in Israel with Hamas' first public response to a ceasefire deal, which Qatari negotiators describe as "generally positive." Democrats blame former President Donald Trump for sinking a bipartisan Senate bill meant to address the crisis at the border. And, there's more attention on the legal responsibilities of parents with guns after a Michigan jury found the mother of the 2021 Oxford Highschool shooter guilty of manslaughter.

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In one of this year’s largest votes, Indonesia will elect a new president in one week’s time; this time the sanctity and future of its democracy are at stake. In Germany prominent people—even Jews—who question Israel’s war in Gaza are being cancelled (10:45). And how many books are you likely to read in what is left of your life (17:25)? 

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Alabama

• Highlights from Govenor Ivey's State of the State address on Tuesday night
• State lawmaker files bill that establishes religious rights during emergency
• Democrat state lawmaker on board with Ivey's gambling bill push during speech
• API president says both sides are out of touch with what primary voters want

National

• No vote in House on impeaching DHS secretary, but vote to be revisited next week
• DC Appeals court rejects immunity argument from Trump re Jack Smith charges
• House Republicans offer resolution that Trump is not insurrectionist re: J6
• RNC chairwoman to step down after SC primary,  new chair to be elected