Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law. 

Editor’s note

DeFi has stolen the show lately. Spectacular rises and falls of unaudited tokens named after meme-able foods changing hands via ascendant liquidity pools have left many of us unimaginative observers mostly blinking.

In this area, I can offer no particularly hot takes beyond the line that keeps coming to me: “This does not end well.” Chalk it up to some midwestern assumption that money you make too quickly is never truly yours. But the situation with DeFi and yield farming resembles the ICO boom too closely for comfort. A fascinating technology very few understand attracts people who can earn a lot of money at the expense of other people wanting to earn a lot of money. 

With the ICO boom, the SEC took a long time to put together the tools to grapple with billions of dollars changing hands, but grabble they have. Similarly, a Calvinist sense of inevitability tells me that the law will come, because the law wants to get paid. In that cheery spirit, we’re looking at a series of recent upgrades to government capabilities to track and punish illicit crypto usage.