Source: a16z crypto editorial "Make the United States a cryptocurrency capital: What to do"

Author: Miller Whitehouse-Levine, CEO of DeFi Education Fund; Amanda Tuminelli is the chief of DeFi Education Fund Legal Attorney;

Compilation: 0xjs@法 法

If someone runs a red light and causes a car accident, who should be responsible for: driver or car manufacturer? It is almost definitely a driver. Of course, car manufacturers have the responsibility to use appropriate materials and install safety devices such as seat belts and airbags, but their obligations are limited to this. It is meaningless to let the car manufacturer's bad driving behavior for their vehicle users, as if it is meaningless to let the driver bear the obligation to automobile manufacturing.

Similarly, if someone uses the vehicle of the car manufacturer as a fleeing vehicle in a bank robbery, you will not ask the autonomous vehicle developer to bear the responsibility. Just as a judge pointed out in the assumption of the scene: you "you will not prosecute the car company to assist illegal behaviors; [you] will sue the individual who makes mistakes."

In the automotive field, these principles seem obvious, but In the digital field, they still have a lot of controversy. Determining who exercises control in a specific system and the degree of control they own is the core issue that all other and legal issues must be surrounded by. The same principles that dominate our understanding of car manufacturers and drivers should be the basis for wisely formulating in the background of decentralized networks and agreements. (In fact, the judge quoted in the above assumptions of the situation is talking about whether UNISWAP, a decentralized cryptocurrency exchange, should be responsible for the fraud tokens created by the plaintiff's purchase.)

The formulation of cryptocurrencies to formulate cryptocurrencies It is reasonable to always start with the analysis of "control" in a given system: If someone controls a certain system or someone else's assets, then who will control it? How do they control it? When to control it? Answer this question can determine who can or cannot be responsible for activities in the digital asset ecosystem.

Put people accountability for systems and activities that they cannot exercise their power or control can lead to adverse consequences. Unfortunately, the United States Department of Justice (Doj) ignored this difference and tried to do this by allowing software developers to initiate the initially created by third parties to use developers but no longer controlled.

In 2024, the U.S. Department of Justice began suing software developers in the blockchain industry (like automakers, they manufacture neutral technology), under Section 1960, with two known cases: U.S. v. Storm and the U.S. v. Rodriguez. The U.S. Department of Justice's accusations in these indictments have a wide range of allegations, indicating that many and other people in the industry may also become a goal, which is equivalent to being responsible for car manufacturers to be responsible for car accidents.

So, as we enter a new era of 2025, the biggest focus of the digital asset industry is to codify the correct and legal understanding of “control” into law – especially the “currency transfer” under Article 1960 Business definition. Currency transfer business is subject to certain registration and information reporting clauses of the Bank Secrecy Act (31 USC § 5312) and the Criminal Law clause (18 USC § 1960), which punishes persons who fail to register their business. The penalties are very severe: Article 1960 provides that violators are fined up to $250,000 and up to five years in prison.

Clarifying and codifying the correct interpretation of the currency transfer law must involve the incorporation of the concepts of custody and control into the law itself. This also means ensuring that entities interpret the law consistently in a way that incorporates these concepts. We believe that this is the most critical issue facing the encryption industry in the United States, because if it is not resolved, the Ministry of Justice can continue to accuse the developer of the non -hosting software -whether it is decentralized finance (DEFI) agreement, the Bitcoin agreement is similar or similar Neutral Agreement – ​​Operating “unlicensed currency transfer business” even if the allegations make no sense because these developers have no control over software or user assets.

The definition of related terms of "capital transfer" should be explained correctly. The "Bank Confidential Law" defines "fund transfer services" as "the value of receiving currency, funds or alternative currencies, and transferring currencies, funds or alternative currencies in any way." At the same time, Article 1960 defines "capital transfer" as "transfers funds to the public in any way." Judging from the literal meaning and relevant legal analysis of these definitions, except for the Ministry of Justice, everyone knows that the "capital transfer" business must actually control user funds.

Give an example to emphasize this difference. Take a digital assets as an example: The person can exchange services on the centralized exchange or DEFI protocol to exchange. To use a centralized exchange, the person first transferred its digital assets to the exchange, and then the exchange kept and controlled these assets. Conversely, the exchange trades on behalf of the person in accordance with the person's instructions. In other words, the exchange represents the funds of "accepting" and "transmission" users on behalf of users. Centralized exchanges have certain risks (e.g., losses and abuses) to control individual funds—responses to what they can and cannot do with such controls can mitigate these risks. If a centralized exchange loses assets that they control on behalf of that person, the exchange shall be held liable.

In DeFi, people can achieve similar results without having to hand over control of the assets to third parties. When exchanging digital assets using decentralized software protocols, people can retain control over their digital assets and never give up that control. Instead, people use a new type of software tool—the DeFi exchange protocol—to unilaterally exchange in their own direction. Different from centralized exchange business,The original developer of the Defi protocol does not retain the control of the protocol, and it is not capable of controlling how to use it for third parties. Only users of the DEFI protocol can control their assets. While there are risks in using the DeFi protocol (for example, it may be a complex technology with higher user error rates), the risk of losing user funds by third parties is less likely to be less likely to be lost because users will not waive their custody from the very beginning. (If you own your own assets, bank failure is not a risk to you.)

A basic understanding of control (i.e. the ability of a third party to actually transfer users’ funds) is key. This is why the centralized trading business described above is appropriately supervised as a "capital transfer" business, but the developers of non -hosting smart contract agreements that cannot be changed are not regulated. This also highlights the danger of misunderstanding and misallocation of control. On the one hand, to identify and mitigate sources of risk, and on the other hand, to correctly allocate responsibilities when problems arise, it is necessary to determine who has the necessary control over the system to mitigate risks, or who is most responsible for certain actions that need remediation.

Industry and legislators must work together in 2025 to ensure that the law correctly reflects the accurate concept of custody and control and its responsibilities arising from it—whether in the Market Structure Act, broker reporting obligations or reforms No. 1960 In the background of the entry. At present, the industry is facing the real threat of the Ministry of Justice's excessive and wrong explanation of the unlicensed remittance business, which is one of the many misunderstandings in the entire encryption field.

As we see in the analogy above, if the car manufacturer is responsible for the collision that exceeds its control range, the car is likely to not succeed. This may stifle car innovation and freeze the American automobile manufacturing industry. If the control and regulatory reality in the background of software development can be reached with the legislators, we will establish a clear and fair foundation for encrypted entrepreneurs and developers in the United States.