Polygon Labs suggests a structure to designate DeFi as essential infrastructure.

The legal team behind Polygon Labs has proposed a new regulatory framework that calls for neutral and decentralized finance (DeFi) protocols to be designated as “critical infrastructure” and overseen by federal cybersecurity agencies in the US. The 45-page paper, titled “A Conceptual Framework for Combating Illicit Finance Activity in Decentralized Finance,” suggests that the US Treasury’s Office of Cybersecurity and Critical Infrastructure Protection (OCCIP) should be responsible for overseeing these protocols. The paper also highlights the need to differentiate between truly decentralized DeFi protocols and those with centralized elements, with the latter being subject to existing financial regulations. Additionally, the authors propose the creation of a new category called “critical communications transmitters” that interact with genuine DeFi systems, which would have specific obligations to protect US national and economic security. The proposed framework aims to address concerns around illicit finance and promote economic prosperity and financial security in the US.