Amanda Tuminelli, Chief Legal Officer of the DeFi Education Fund, said that the current regulatory landscape for the U.S. crypto industry lacks clarity and is pushing innovation offshore. Tuminelli shared her statement during a Sept. 10 Congressional hearing.
"The exponentially increasing amount of regulatory enforcement actions in recent years—which pay no mind to the details of the technology they presume to center on—have not accomplished any policy objectives or resulted in any kind of clarity for the industry," said Tuminelli. "The net result of the current legal landscape for digital assets and DeFi has driven American developers and businesses to relocate to friendlier jurisdictions. But it is not too late. The U.S. can continue its long tradition of being a leader in innovation by taking the time to learn about new technology and create rules that make sense with its functionality."
According to Tuminelli, decentralized financial (DeFi) technology "was developed in response to the many challenges and risks inherent in the structure of intermediated financial services," such as liquidity challenges and unequal access. Rather than relying on third-party financial intermediaries, DeFi transactions rely on blockchain technology, which establishes openness, transparency, and immutability.
Tuminelli said DeFi technology provides greater access to the financial system due to the lower costs associated with transactions. Additionally, she noted that "DeFi protocols are open and available to anyone in the world with an internet connection, significantly expanding global access to financial services." Individuals who may face barriers to accessing traditional financial services due to excessive pricing, unstable currencies, or other issues are able to participate in the DeFi ecosystem. Tuminelli warned that if the U.S. fails to adopt regulations for these innovations, innovators will continue to leave the country and it will fall behind. The share of digital asset developers based in the U.S. dropped from 40% in 2018 to 26% by the end of 2023.
Former U.S. Senator Pat Toomey expressed concerns about the U.S. Securities and Exchange Commission's (SEC) enforcement actions in the crypto industry. According to an opinion he authored, Toomey said these actions are harming innovation and pushing entrepreneurs into other jurisdictions. "Instead of providing upfront clarity on how existing securities laws apply to the crypto industry, the SEC has regulated by enforcement," Toomey said. "This has chilled the development of the crypto and blockchain ecosystem in the United States. Entrepreneurs developing new blockchain applications are increasingly doing so overseas where jurisdictions have the legal and regulatory clarity that the United States lacks."
The SEC has imposed approximately $4.7 billion worth of enforcement actions against crypto firms and executives so far in 2024, representing a 3,018% increase from 2023, CoinTelegraph reported.
Prior to joining the DeFi Education Fund, Tuminelli was an attorney for Kobre & Kim, according to their website. She also previously served as a law clerk for Honorable Ann M. Donnelly of the U.S. District Court for the Eastern District of New York.
