General counsel to Compound Labs, Jake Chervinsky, has warned that the Treasury Department wants to “capture” the DeFi sector through the crypto provisions added to the infrastructure bill.
The last-minute cryptocurrency provisions added to the U.S. infrastructure bill sought to “capture DeFi,” argues Compound’s general counsel Jake Chervinsky.
Appearing on the Bankless State of the Network podcast on August 17, Chervinsky — who is also DeFi Chair of the Blockchain Association — said the industry had been “blindsided” by the infrastructure bill’s crypto tax provisions which were announced just nine days prior to when it was expected to pass through the senate.
While Chervinsky seemed willing to give most elected officials the benefit of the doubt, noting that previous discussions surrounding the infrastructure bill had “nothing to do with crypto,” he attributed more sinister motives to the Treasury Department’s role in influencing the legislative process.
Cherversinky stated he was informed that the Treasury Department had initially opposed exempting network validators and software developers from stringent third-party reporting requirements under the bill as it was concerned the altered legislation would not “adequately capture DeFi.”
“That’s why we couldn’t get the language changed to only capture the centralized exchanges.
Chervinsky’s understanding is that Treasury feared the industry would argue that DEX liquidity providers and other DeFi participants are involved in validating transactions and should therefore be exempted from the regulation.
Despite the Treasury Department backing down on its position after realizing it could not “steamroll the industry,” Chervinsky emphasized he was concerned unelected Treasury officials have too much influence on the legislative process.
Chervinsky celebrated the achievements of the crypto lobby in pushing back against the provisions.