Federal regulators are targeting crypto from a range of new angles. The CFTC's action against Ooki DAO is the latest example.
Considerable anxiety exists in the world of Web3 related to regulation and the legal status of cryptocurrency projects. It’s particularly apparent in the United States, where the Commodity Futures Trading Commission fueled concerns in September with an announcement that it was imposing a $250,000 fine on a, Ooki DAO, and its investors. The fine was particularly ominous, considering DAOs are intended to be “regulation proof.
The fine is not all that surprising. The CFTC and other regulators are not going to abide by a veil of decentralization. But, there is something within the ruling that is extremely worrying to Web3 lawyers and developers. The agency’s complaint indicated that the voters within a given DAO could be distinctly liable.
The SEC has traditionally sought to regulate cryptocurrency as much as possible. The agency plays a useful role as it is able to pursue instances of outright fraud and Ponzi schemes, which are rampant in Web3. But, there is a stark difference between going after instances of fraud and regulating or governing the industry with regulations that are inapplicable.
Though nobody has really said it, what we seem to be witnessing is a war on crypto cloaked in democratic language. The very pillars upon which distributed ledgers have been built are crumbling if these measures are enforced.The conflict between traditional regulators and modern finance seems to be reaching a melting point. Regulations are not adapting to meet the needs and strengths of modern DeFi. As such, there is now a standoff between new Web3 protocols and existing legislation.
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