In the wake of the 2024 U.S. election, the decentralized finance (DeFi) industry finds itself at a critical juncture. With over $100 million in crypto campaign spending and the election of a pro-crypto administration, the regulatory outlook has shifted dramatically. As bitcoin surges past $90,000 and market euphoria reigns, DeFi leaders must refocus on the path forward—one centered not on partisan politics, but on the industry’s evolving role in shaping the future of finance.
Rebecca Rettig, Chief Legal & Policy Officer at Polygon Labs, recently testified before the House Financial Services Subcommittee on Digital Assets. The hearing, a snapshot from a pre-election era, has given way to a new reality where crypto has emerged as a genuine campaign issue. Candidates actively courted industry support, debating the future of digital assets and pledging transformative measures like a national Bitcoin reserve. The election results, particularly in races where crypto policy proved decisive, demonstrate that voters across party lines are galvanized by issues of innovation, consumer protection, and financial inclusion.
Forging Common Ground Through Education, Innovation, and Security
To navigate this new landscape, Rettig emphasizes three critical initiatives requiring collaboration between the DeFi industry and policymakers:
1. Education
With new faces in Congress and shifting committee assignments, educating policymakers about DeFi fundamentals is paramount. The election showed that when officials understand the technology, they’re more likely to support it—evidenced by the margins of victory for pro-crypto candidates who invested time in learning the basics. The industry must make complex concepts accessible, using analogies and real-world examples to illustrate how DeFi can revolutionize legacy systems. Policymakers, in turn, must engage with the technology and its users before enacting regulation.
2. Building Useful Applications
While speculation may drive short-term excitement, the DeFi industry must focus on developing applications that demonstrate the technology’s transformative potential. Initiatives like The Value Prop, an open database cataloging blockchain use cases across networks, showcase how DeFi can redistribute power by enabling individuals to control their data, assets, and content without intermediaries. Policymakers must grapple with the reasons this technology matters, recognizing its ability to create a more accessible, efficient, and equitable financial system.
3. Enhancing Security
Combating illicit activity is a shared priority for the DeFi industry and regulators alike. While eliminating all bad actors is impossible in any financial system, DeFi’s inherent transparency offers unique advantages in tracing transactions and returning stolen funds. The industry must continue innovating on security measures, such as multi-signature wallets and decentralized insurance, while policymakers learn to adapt existing laws to intermediary-less systems. Grassroots efforts like the Security Alliance and the work of individuals like ZachXBT demonstrate the community’s commitment to creating a safer ecosystem.
As DeFi enters this new chapter, nuanced understanding and deep collaboration between industry leaders and policymakers will be essential. By prioritizing education, meaningful innovation, and robust security, the U.S. can seize the opportunity to lead in shaping the future of decentralized finance. The road ahead requires approaching DeFi with the thoughtfulness and foresight it deserves, transcending partisan divides to unlock its potential for driving financial inclusion, consumer protection, and transformative innovation.
With new faces in Congress and shifting committee assignments, educating policymakers about DeFi fundamentals is paramount. The election showed that when officials understand the technology, they’re more likely to support it—evidenced by the margins of victory for pro-crypto candidates who invested time in learning the basics. The industry must make complex concepts accessible, using analogies and real-world examples to illustrate how DeFi can revolutionize legacy systems. Policymakers, in turn, must engage with the technology and its users before enacting regulation.
2. Building Useful Applications
While speculation may drive short-term excitement, the DeFi industry must focus on developing applications that demonstrate the technology’s transformative potential. Initiatives like The Value Prop, an open database cataloging blockchain use cases across networks, showcase how DeFi can redistribute power by enabling individuals to control their data, assets, and content without intermediaries. Policymakers must grapple with the reasons this technology matters, recognizing its ability to create a more accessible, efficient, and equitable financial system.
3. Enhancing Security
Combating illicit activity is a shared priority for the DeFi industry and regulators alike. While eliminating all bad actors is impossible in any financial system, DeFi’s inherent transparency offers unique advantages in tracing transactions and returning stolen funds. The industry must continue innovating on security measures, such as multi-signature wallets and decentralized insurance, while policymakers learn to adapt existing laws to intermediary-less systems. Grassroots efforts like the Security Alliance and the work of individuals like ZachXBT demonstrate the community’s commitment to creating a safer ecosystem.
As DeFi enters this new chapter, nuanced understanding and deep collaboration between industry leaders and policymakers will be essential. By prioritizing education, meaningful innovation, and robust security, the U.S. can seize the opportunity to lead in shaping the future of decentralized finance. The road ahead requires approaching DeFi with the thoughtfulness and foresight it deserves, transcending partisan divides to unlock its potential for driving financial inclusion, consumer protection, and transformative innovation.
