US Lawmakers Delay DeFi Bill, Sparking Renewed Criticism from Industry Executives
The planned expansion of the Digital Asset Market Clarity Act (CLARITY) has been postponed, delaying progress on a bill that would determine how cryptocurrencies and decentralized finance (DeFi) platforms are regulated. This move has prompted renewed opposition from DeFi executives, who argue that the bill still does not adequately protect developers. Industry groups and crypto venture firms have warned that the proposed changes could introduce requirements unsuitable for decentralized systems.
Representatives from Paradigm and Variant have expressed concerns that the current draft leaves unresolved ambiguities over whether DeFi developers and infrastructure providers could be forced to implement Know Your Customer (KYC), register with financial regulators, or comply with centralized platform rules. The delay follows increasing criticism from across the crypto sector, including public pushback from Coinbase CEO Brian Armstrong, which prompted Senate Banking Committee Chairman Tim Scott to announce a “brief pause.”
Vitalik Buterin Calls for a New DAO Design
Ethereum co-founder Vitalik Buterin has called for a rethink in the design of decentralized autonomous organizations (DAOs), arguing that most DAOs are little more than token-voting treasuries. Buterin believes this model is inefficient, fragile, and cannot outperform traditional governance systems. He suggests that DAOs should be specifically designed to support core infrastructure such as oracles, on-chain dispute resolution, insurance decisions, and long-term project ownership.
Buterin also explained that different governance issues require different structures and distinguished between cases that benefit from decisive leadership and broad compromises. He warned that low participation, forest dominance, and decision fatigue remain major challenges, saying privacy tools, limited AI support, and better governance design are critical for DAOs.
DeFi Protocol Pendle Revamps Governance Token
DeFi protocol Pendle is revamping its governance model by phasing out its vePENDLE token and launching a new liquid staking and governance token, sPENDLE. The team said vePENDLE’s long lock-up periods, lack of portability, and complex voting mechanisms limited participation even as the protocol grew to a total value (TVL) of nearly $3.5 billion.
The new token aims to lower the hurdles by allowing withdrawals after a 14-day settlement period, enabling integrations across other DeFi platforms, and making it easier to participate in governance. Pendle is also streamlining voting requirements and plans to use up to 80% of protocol revenue for governance rewards and token buybacks.
New SEC Filings Push for Self-Custody and DeFi Regulation
Two new submissions to the U.S. Securities and Exchange Commission’s crypto task force increase pressure on regulators to clarify how self-custodial rights and DeFi activities will be treated under upcoming market structure rules. A filing related to Louisiana law protecting the right of private investors to self-custody warned that overly broad exemptions in federal proposals could weaken investor protections and increase the risk of fraud.
Another post from the Blockchain Association argued that companies that trade tokenized stocks or DeFi assets through their own accounts should not automatically be classified as regulated traders. The filings come amid negotiations in Congress as policymakers and industry representatives push for a compromise.
Aave Refocuses on DeFi and Hands Over Responsibility for Lens to Mask Network
Lending protocol Aave has transferred management of the Lens Protocol to Mask Network, limiting its role to technical advisory support as it refocuses on DeFi. As part of the transition, Mask Network will lead consumer-facing development and product execution for Lens-based social applications, while the protocol’s core infrastructure remains permissionless and open source.
Vitalik Buterin, co-founder of Ethereum, welcomed the move, saying that decentralized social networks built on shared data layers are crucial to fostering competition and improving online discourse.
Overview of the DeFi Market
Most of the top 100 cryptocurrencies by market capitalization ended the week in the red, according to data from Cointelegraph Markets Pro and TradingView. The White Whale (WHITEWHALE) token fell over 57% for the week, marking its largest decline in the last seven days. This was followed by a token called Merlin Chain (MERL), which fell 48% last week.
Thank you for reading our roundup of the most influential DeFi developments this week. Join us next Friday for more stories, insights, and information on this dynamically evolving field. For more information, visit Cointelegraph.
