Shalini Nagarajan

<div id="highlights-block_6351059f58fa4" class="highlights">
 <ul>
 <li>Draft shows modifications to language that drew criticism for being incompatible with DeFi</li>
 <li>Sam Bankman-Fried said the bill will provide customer protection without jeopardizing DeFi</li>
 </ul>
 
</div>



Details around Bitcoin and Ethereum regulation have been “circulating secretly” in Washington, DC. Now, a copy of draft language for the Digital Commodities Consumer Protection Act (DCCPA), a bill in the US Congress, was <a href="https://github.com/LeXpunK-Army/Crypto-CaseLaw/blob/main/DCCPA%20Markup%20Latest%2010.19.22.pdf" target="_blank" rel="noreferrer noopener">uploaded to GitHub</a> by crypto attorney Gabriel Shapiro. Views on the potential impact on decentralized finance (DeFi) are mixed.



The latest draft appears to cushion language perceived to be detrimental to DeFi — a category of blockchain-based solutions that aim to improve finance by replacing central intermediaries with software code.



It lays out what constitutes digital commodities, brokers, custodians, dealers and platforms. Also included in the document are rules and the core principles that apply to players in the digital commodities sphere.



Shapiro noted that the draft excludes people who develop or publish software from the term “digital commodity trading facility” — a move he said could be beneficial to the crypto industry by protecting software engineers.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I have long been a believer in transparency and open discussion of the future of cryptolaw. Accordingly, I have obtained a copy of a draft of the notorious DCCPA circulating secretly in D.C. and am hereby making it available to the public. <a href="https://t.co/JdyomquQi6">https://t.co/JdyomquQi6</a>&mdash; _gabrielShapir0 (@lex_node) <a href="https://twitter.com/lex_node/status/1582814734587265024?ref_src=twsrc%5Etfw">October 19, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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But he expressed doubt over the origin of this exclusion, calling for other commentators to review the draft and voice their opinions. The attorney, general counsel at Delphi Labs, said he shared the draft in the interest of “transparency and open discussion of the future of cryptolaw.”



The <a href="https://cms.blockworks.co/bitcoin-ether-to-be-regulated-as-commodities-by-cftc-per-new-senate-bill/" target="_blank" rel="noreferrer noopener">bipartisan bill was introduced</a> by Sens. Debbie Stabenow (D-MI) and John Boozman (R-AR) in August. Their legislation clarifies that bitcoin and ether are to be classified as commodities, as opposed to securities that come under the ambit of the Securities and Exchange Commission — implying that the Commodity Futures Trading Commission (CFTC) would have exclusive jurisdiction over them.



After the introduction of the bill, <a href="https://www.washingtonpost.com/business/2022/08/03/stabenow-boozman-bitcoin-cftc-bill/" target="_blank" rel="noreferrer noopener">The Washington Post</a> reported Boozman said in a press call that the crypto industry “almost universally” prefers to be regulated by the CFTC.



<h3 class="wp-block-heading">Sam Bankman-Fried believes draft bill won’t kill DeFi</h3>



FTX CEO Sam Bankman-Fried has expressed support for the framework, saying he was excited to see a “strong bill” that addresses customer protection in crypto.&nbsp;



On Wednesday, the crypto billionaire <a href="https://twitter.com/sbf_ftx/status/1582539579168419840" target="_blank" rel="noreferrer noopener">tweeted</a> that he was optimistic the Stabenow-Boozman bill would not jeopardize “the existence of software, blockchains, validators, DeFi, etc.”



He also shared his thoughts in a <a href="https://www.ftxpolicy.com/posts/possible-digital-asset-industry-standards" target="_blank" rel="noreferrer noopener">blog</a> on what crypto regulation should look like, specifically saying it’s important that “on-chain code and DeFi remain free and open, and uncensored.”



Even so, Bankman-Fried, chief of a centralized crypto exchange, has been <a href="https://twitter.com/richardchen39/status/1580617610789814277" target="_blank" rel="noreferrer noopener">criticized</a> for supporting a bill that appears to threaten decentralized protocols.



<h3 class="wp-block-heading">Concerns about Congress choking decentralization</h3>



On the critical side of the debate, Web3 startup accelerator Alliance DAO disparaged the DCCPA bill, saying it forces human intermediation and compels projects to sacrifice decentralization.&nbsp;



The DAO reckons the bill does not clarify what a digital commodity is, or make clear the distinction between tokens that are commodities and those that aren’t.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The DCCPA greatly threatens DeFi innovation. The proposed bill: &#8211; gives CFTC new powers to regulate spot markets &#8211; forces human intermediation &#8211; forces projects to sacrifice decentralization It favors centralized incumbents and kills startups. Alliance opposes the DCCPA. 🧵&mdash; Alliance 👽 (@alliancedao) <a href="https://twitter.com/alliancedao/status/1582800340520312833?ref_src=twsrc%5Etfw">October 19, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Framework Ventures’ co-founder Vance Spencer also <a href="https://twitter.com/pythianism/status/1582816353634832385" target="_blank" rel="noreferrer noopener">voiced opposition</a>, saying the venture capital firm “opposes the DCCPA and the shadow cabal that is trying to make it a reality.”



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“DCCPA kills DeFi and cedes market share to the centralized exchange that is pushing it,” Spencer added.</blockquote>



Most crypto exponents hope the draft can be amended to treat DeFi fairly.



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Alliance DAO

Leaked Draft of US Congress’ ‘DeFi Killer’ Bill Sparks Debate

Sebastian Sinclair

<div id="highlights-block_625ed85ad344c" class="highlights">
 <ul>
 <li>The firm said it&#8217;s earmarked $200 million for blockchain gaming startups</li>
 <li>Framework now oversees approximately $1.4 billion, making it one of the largest VCs in blockchain </li>
 </ul>
 
</div>



Venture capital firm Framework Ventures has raised $400 million for a fund focused on investing in early-stage startups involved in some of the crypto industry&#8217;s frothiest sectors.



Framework&#8217;s third fund (FVIII) is expected to target blockchain gaming, Web3 and DeFi startups, as well as networks in the hope of banking big on the next successful crypto vertical, according to a statement Tuesday.



Of the total $400 million, 50%, or $200 million, has been earmarked for blockchain gaming, Adam Badrawi, the firm&#8217;s communications partner told Blockworks in an email. Badrawi declined to comment on where the remaining 50% would be split.



The firm now oversees approximately $1.4 billion, pole-vaulting it to one of the largest VCs in the blockchain industry. The majority of Framework&#8217;s assets stem from a small set of institutional stakeholders.



Considered by some as one of the <a href="https://decrypt.co/16943/why-framework-ventures-is-going-all-in-on-defi" target="_blank" rel="noreferrer noopener">earliest</a> DeFi (decentralized finance) venture capital firms, Framework planted its roots in 2019 by leveraging an $8 million raise slated for the budding growth of DeFi.



Now intending to expand upon its beginnings, Framework said its investor team had &#8220;identified&#8221; the industry&#8217;s gaming sector as an area of &#8220;significant growth&#8221; over the next five years.



The company said it was &#8220;reinforcing its commitment,&#8221; having already dedicated large swaths of capital to various segments of the gaming sector following early round investments in Stardust and the $6 billion project shooting for a Triple-A title, Illuvium.



“We believe we have pioneered a new style of crypto investing&#8230;and intend to deploy it aggressively across other major verticals in the blockchain industry,” Framework Co-founder Vance Spencer said. &#8220;We believe we’re well-positioned to outperform our competitors, including the <a href="https://www.theinformation.com/articles/no-longer-just-crypto-curious-sand-hill-road-investors-get-blockchain-fever" target="_blank" rel="noreferrer noopener">Sand Hill</a> set that is only now coming into crypto and Web3.&#8221;



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