The post DeFi advocacy group urges DOJ to rethink liability for developers appeared on BitcoinEthereumNews.com.

Crypto advocacy group DeFi Education Fund has urged the US Department of Justice (DOJ) to reconsider its approach to holding DeFi protocol developers accountable for users’ actions. In a blog post published on Feb. 4 by Andreessen Horowitz (A16z), co-authors Miller Whitehouse-Levine and Amanda Tuminelli from the DeFi Education Fund argued that developers should not be liable for how their software is used, comparing them to car manufacturers who are not responsible for drivers’ actions. According to them: “The same intuitive principle that governs our understanding of car manufacturer and driver liability should be the foundation of sensible policymaking in the context of decentralized networks and protocols.” The authors warned that targeting developers under laws such as Section 1960 could create harmful precedents, potentially expanding legal risks across the crypto industry. They wrote: “Holding people responsible for systems and activities over which they exercise no agency or control leads to perverse outcomes. “ They further stressed that policymakers must distinguish between those who create technology and those who actively control it. Misplacing liability, they argued, could hinder technological advancement and discourage innovation in the DeFi sector. Regulatory clarity To illustrate their point, the authors outlined how the DOJ’s broad interpretation of the “Money Transmitting license” negatively impacts the industry by comparing transactions on centralized exchanges to DeFi protocols. This law governs money-transmitting businesses and carries severe penalties, including fines of up to $250,000 and five years in prison for failing to register. Presently, the authorities are entangled in a legal showdown with Tornado Cash’s developer, Roman Storm, for alleged violation of this provision. According to them, when users trade on a centralized exchange, they transfer funds to the platform, giving it control over their assets. This arrangement makes centralized exchanges subject to financial regulations. However, in DeFi, users retain full control over…

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Filed under: News - @ February 5, 2025 1:19 pm