Thread by @boironattorney

1. The White House's stablecoin report from the President's Working Group on Financial Markets was released today and touches on many important issues related to stablecoins with some discussion of DeFi. 👇

2. Some meaningful language: "[m]uch of the trading, lending, and borrowing activity currently fueled by stablecoins on digital asset trading platforms and within DeFi similarly may constitute securities and/or derivatives transactions...."

3. Based on what we know about the SEC's investigations into DeFi and Gensler's certain influence on this report, this language isn't surprising. It does not reveal much other than a lot of thought needs to be put into the design of DeFi protocols.

4. DeFi discussion was focused on the impact of stablecoins on DeFi protocols and risks associated with those relationships. The most telling aspect of the DeFi discussion was the risks that the report identifies:
- fraud
- stablecoin failure threatening DEXs
- money laundering

5. risks continued:
- terrorist financing
- leverage
- non-compliance with regulations
- information asymmetries
- inconsistent trade/price disclosure
- manipulation
- blockchain specific issues (governance/interoperability/scalability/vulnerabilities/cybersecurity/etc.)

6. So, basically every risk of anything possibly happening in any way. Based on these risks, the report's conclusion is that regulatory oversight is necessary because oversight addresses the risks identified above. In reality, the report assumes the lowest common denominator.

7. The report reflects conclusions based on that common denominator. This shows work needs to be done to show that not all DeFi should be treated equally and the functioning of each protocol should be considered in a new regulatory framework to determine appropriate regulations

8. The report's recommendation that legislation be enacted promptly is unlikely to result in stablecoins being treated separately with no consideration for DeFi, especially given how closely the report tied DeFi to stablecoins and vice-versa.

@jchervinsky is right that this is not something that's going to happen anytime soon.

https://twitter.com/jchervinsky/status/1455262559498559488?s=20