The DeFi Debrief

Week of March 24, 2025: DEF at Tokenize.NYC & DAS; Tornado Cash Update; SEC Drops Ripple; SEC on POW Mining

DeFi Education Fund Represents DeFi at Tokenize and DAS

Last week, DeFi Education Fund (DEF) was in New York City to discuss the rapidly unfolding crypto policy landscape. DEF’s Executive Director and Chief Legal Officer Amanda Tuminelli made a number of appearances.

Tokenize.NYC

Amanda spoke on a panel at Tokenize.NYC entitled “How will the US Administration's approach to digital assets evolve in the near future?” The panel also featured DEF Board Members Jake Chervinsky and Rebecca Rettig, and Cathy Yoon, General Counsel at Wormhole Foundation.

The panel discussed the changing regulatory environment for crypto under the new Administration, including the progress already made and the obstacles that remain ahead. While the panel was optimistic about mitigated regulatory and enforcement risk for projects and developers under the new Administration, there was agreement that durable wins—getting clear rules and laws on the books in the near future—are essential to ensuring the future of crypto in the United States.

Amanda emphasized existential risks posed by Department of Justice actions against DeFi software developers alleging charges related to “unlicensed money transmitting businesses.” The panel also had a comprehensive conversation on DeFi, focusing on software developer liability and compliance obligations. Amanda cautioned that legislation sometimes unknowingly touches on DeFi by hanging disclosure or compliance obligations on software or developers. The panel agreed that we need more education to ensure that DeFi innovation isn’t overly burdened by legislation or regulation. DEF Board Member Jake Chervinsky noted that, unlike traditional financial intermediaries with power imbalances and reliance, DeFi has no customers—only users who control their own finances onchain—making it unsuitable for regulations or legislation that treats it like traditional financial services.

For the full Tokenize livestream: click [HERE].

FinTech TV Opening Bell Live

Amanda appeared on FinTech TV Market Movers: Opening Bell Live to talk about the latest policy developments in DeFi & crypto, including the bipartisan supermajorities in both Chambers of Congress passing the Congressional Review Act Resolution disapproving of the harmful IRS “Broker” rule. Additionally, Amanda discussed the progress being made at the Securities and Exchange Commission (SEC) with the newly-minted Crypto Task Force, as well as the dropping of crypto investigations and enforcement actions against crypto market participants, allowing developers to feel more comfortable building and innovating in the United States.

Blockworks Digital Assets Summit

The DEF team was also at Blockwork’s Digital Assets Summit. Amanda spoke on a panel entitled “Compliance Amidst Crypto's Regulatory Sea Change” alongside former Representative Wiley Nickel (D-NC), Mike Selig from SEC’s Crypto Task Force, Joe Cutler, and Daniel Escobar.

Amanda reiterated the need for concrete legislative wins and clear, written rules that will outlive this Administration, especially delineating what software developers can and cannot do. Amanda applauded Commissioner Hester Peirce request for information from the industry and the Token Safe Harbor Proposal, both of which highlight the need for technology neutrality and protections for software developers. Addressing a question posed to her about distinguishing between software and intermediaries in regulation, Amanda advocated for a control-based framework that assesses who holds control of a system and their compliance obligations. Amanda noted that DeFi resembles infrastructure, and shouldn’t be treated differently than other forms of infrastructure.

DEF will soon be responding to certain aspects of Commissioner Peirce’s Request for Information and Token Safe Harbor Proposal, so be on the lookout for that in the coming weeks.

Treasury Department Removes Tornado Cash Sanctions

Last week, after responding to the Plaintiffs’ Motion for Entry of Judgment in the case of Van Loon v. Treasury, the Treasury Department Office of Foreign Assets Control (OFAC) formally announced the delisting of the Tornado Cash website and certain immutable smart contracts from its Specially Designated Nationals (SDN) list under the International Emergency Economic Powers Act (IEEPA).

DeFi Education did an in-depth analysis and X thread on the delisting. To read DEF’s analysis, click [HERE].

SEC Drops Case Against Ripple

According to Brad Garlinghouse, the CEO of Ripple, the Securities and Exchange Commission (SEC) has dropped its lawsuit against Ripple, ending a four-year legal battle. The case, which began in 2020, alleged that Ripple and its executives conducted an unregistered securities offering. In deciding a motion in 2023, the district court made a critical distinction between primary sales, where XRP was sold directly by Ripple as the issuer, and secondary sales, where XRP was traded between independent buyers on exchanges. The court found that primary sales to institutional investors constituted securities transactions but sales on the secondary market did not qualify as securities transactions since buyers were not purchasing directly from Ripple or in reliance on Ripple’s efforts for an expectation of profits.

The continuation of dropping enforcement actions is a win for Ripple and the industry, and represents a shift away from the former administration’s regulation-by-enforcement regime, hopefully setting the stage for clearer, more predictable rules moving forward.

SEC Releases Staff Statement Scoping-Out Proof-of-Work Mining

On March 20, the SEC Division of Corporate Finance released a Staff Statement clarifying that certain proof-of-work “Protocol Mining” activities involving the mining of specific “Covered Crypto Assets” do not constitute securities offerings.

Specifically, the SEC explained that because miners receive rewards based on their own computational efforts, rather than the managerial or entrepreneurial efforts of others, these mining activities do not meet the Howey test for an investment contract. As a result, miners are not required to register mining activities or seek an exemption from registration under federal securities laws. Notably, the Statement only covers certain fact patterns, signaling that deviations in how mining pools or individuals operate their mining activities may still implicate securities laws.

However, it is important to note that the Statement, “like all staff statements, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.” Even so, the Statement provides reassurance to miners and miner pool participants that their activities, as described, are likely not subject to the regulatory requirements of securities offerings.

DeFi Education Fund applauds the efforts of the Crypto Task Force to provide regulatory clarity to the industry by minding the technological nuances of blockchain technology.