Whether the formal move in that direction now is enough to protect dai from the stablecoin regulation.

It may still be that there’s a decentralization threshold beyond which regulators can’t or won’t intervene. Administration of a protocol’s governance could evolve to where it’s out of the hands of its founders and is guided by the decisions of its network, and so it escapes the scope of regulation. That’s kind of what SEC Director of Corporation Finance William Hinman said in a much-cited speech about Ethereum in 2019.

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If so, a big test of that idea may come with MakerDAO, the decentralized lending platform that runs the dai (+0.01%) stablecoin. In a blog post last week, founder Rune Christensen said the MakerDAO Foundation, which runs the lending system, will hand over control entirely to a decentralized autonomous organization (DAO), also called MakerDAO.

As Christensen explained on our podcast recently, the founders quickly learned it was impossible to launch an entirely decentralized platform from the start. The decision-making of the foundation was needed for the system to run effectively at first, but the founders worked to build out the participation, liquidity and a structure that would eventually allow the protocol to run by itself.

Whether the formal move in that direction now is enough to protect dai from the stablecoin regulation that is also expected to be forthcoming is another thing. Legislation to provide a “comprehensive legal framework” to regulate cryptocurrencies and stablecoins was introduced in the House of Representatives Wednesday.

It does look as if DeFi is now very much in the U.S. government’s crosshairs.