Article Summary

A controversial new bill proposed by Senate Democrats could severely restrict decentralized finance (DeFi) operations in the United States through unprecedented regulatory measures. The legislation would grant the Treasury Department authority to establish a "restricted list" targeting high-risk DeFi protocols, forcing Know Your Customer (KYC) compliance requirements on American cryptocurrency users and imposing significant financial penalties for violations. The proposed DeFi regulation has sparked fierce opposition from major blockchain industry organizations, including the Blockchain Association, Digital Chamber of Commerce, and cryptocurrency exchange Coinbase. Industry leaders warn that these restrictive measures could drive DeFi innovation offshore, potentially undermining America's competitive position in the rapidly growing cryptocurrency and blockchain technology sectors. This regulatory development represents a critical juncture for the DeFi ecosystem, which has revolutionized traditional finance through smart contracts and decentralized protocols. The bill's impact could extend beyond DeFi platforms to affect Bitcoin users, Ethereum-based applications, and the broader cryptocurrency market. As regulatory uncertainty continues to challenge the digital asset space, stakeholders are closely monitoring how this legislation might reshape the future of decentralized finance in America.