DeFi compliance in 2024, and new SEC rules set to be challenged: Finance Redefined

Experts say the SEC’s new rule impacting DEX liquidity providers has attracted much criticism and may be challenged in court.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.

In an interview with Cointelegraph, Ripple’s president stated that 2024 could be the year of DeFi regulations. Meanwhile, the United States Securities and Exchange Commission (SEC) has introduced a new definition for a “dealer” and “government securities dealer,” targeting liquidity providers in DeFi. But, experts believe stakeholders will challenge the new rule in court.

The top 100 DeFi tokens had a bullish week, following the footsteps of broader market gains, and the total value locked (TVL) in DeFi protocols crossed $63 billion.

DeFi compliance to be a top industry trend in 2024, says Ripple’s president

According to its president, Monica Long, global payment network Ripple expects compliance in decentralized finance (DeFi) to be the industry’s “biggest breakthrough” of 2024.

In an interview with Cointelegraph, Long said previous hype cycles fueled by initial coin offerings and nonfungible tokens would be replaced by real-world utility at scale, which requires compliance, usability and integration with existing systems.

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SEC’s new dealer rules will be challenged in court, say experts

The U.S. SEC adopted new rules on Feb. 6 that redefine “dealer” and “government securities dealer.” First proposed in 2022, the new rules require more crypto market participants to register, join a self-regulatory organization and comply with federal securities laws.

The new SEC rules have garnered much criticism from the crypto community, DeFi ecosystem and pro-crypto politicians. Since the rules were first proposed two years ago, the crypto community has protested, citing a lack of clarity on the definition of crypto securities.

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EigenLayer TVL rockets $1 billion after temporarily removing staking caps

Ethereum-based liquid restaking protocol EigenLayer’s TVL has surged by a staggering $1 billion in just eight hours after the protocol temporarily removed its staking cap.

On Feb. 5, EigenLayer announced that it would temporarily lift its 200,000 Ether (ETH) per protocol staking cap until Feb. 9 to “invite organic demand” to the network. The protocol said this temporary removal is “paving the way to a future” where all staking caps are permanently removed.

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Block Earner case brings “nuanced implications” for DeFi in Australia

An Australian federal court has seemingly formed a nuanced distinction over crypto-yield products, ruling that while products that promise a managed yield require a financial services license, “pass-through” DeFi products may not.

In a Feb. 9 order, federal judge Darren Jackson ruled that Block Earner would be subject to penalties over the offering of its “Earner” product in 2022, which offered yield for loans denominated in USD Coin (USDC), Bitcoin (BTC), Ether and PAX Gold (PAXG), explaining that it needed to obtain an Australian Financial Services License.

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DeFi market overview

Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market capitalization had a bullish week, with most trading in the green on the weekly charts. The TVL in DeFi protocols reached $63.9 billion.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.