Creating Our Narrative: How DeFi Can Self-Regulate - Tammy Fisher

[Applause] hello hello uh so um i'm tammy fisher i'm the head of legal at open uh opens a decentralized options and derivatives platform uh working on power perpetuals and a lot of other really interesting innovative stuff but i'm actually not here to talk about open today i'm going to talk a little bit more about my experience is essentially being a crypto lawyer a dow lawyer and what that kind of means is what i've seen in the past couple years as far as regulation in the space and how it's developing and how we actually can actually have a huge impact on the direction of regulation over d5 so uh i'm also going to tell a little story a bit of an allegory that some of my finance nerds might know about this story and maybe some of the legal people in the crowd as well but it's an older story than mem or anything like that it has to do with a onion speculator an onion farmer his name was vincent casuga so vincent was a pretty poor version of a futures trader but he traded wheat wasn't doing too well at it so he decided along with partners uh in his industry to corner the onion market what does that mean by cornering the onion market he bought nine million pounds of onions and secretly stored them in uh off-site warehouses throughout the united states he owned 98 of the onion market in 1955 what did he do with that he said i'm going to contact all the main oni manufacturers and i'm going to say hey guess what i own you and i own the price of onions and not only that i'm going to short the onions futures market because i control it so when he did that he made 8.5 million dollars in 1956 uh which is the equivalent of about like 70 million dollars today basically you could say like a very very successful ico but in this way it was uh onions but as you can imagine manufacturers consumers and of course in the onions business were not very happy about this and this turned into a huge reaction in the federal government basically what came out of this whole onion crisis there were uh congressional hearings on the subject uh the the head of the president of the chicago mercantile exchange that's actually the same exchange that now does the bitcoin commodity if you know anything about that they've been around for a long time they were involved in this conversation but the spill basically got pushed through by gerald ford that said no more onion features period not just can't sell onions sometimes in certain amounts just no more onions so i would consider this a overreaction to a problem that could have been dressed through more sophisticated means so why does this matter especially when i'm talking about crypto i know we have like a lot of meme coins onions but basically what ended up happening by outlawing futures for onion's period was that the effect was the opposite of what most people would expect the volatility in the onion market was actually still very high and onions were just more expensive in general compared to other vegetables so public outcry equals overly blunt laws the main problem with when we have public outcry over an overly blunt law is especially in a complex industry like finance is you just get nothing in the place where there could be some sort of innovation in effect in the laws and basically building off of that innovation um and the i'll go back to the sled so what did eb harris say he said this law is burning down the barn to find a suspected rat why did he say that he's saying you know futures are very complex we can create best practices there's public public education around how futures contracts work if we actually educate the public and congress maybe we could have thought of like a more smart sophisticated law that actually addressed these issues and one thing to think about here as like a long-term note uh was that basically the futures industry in general from this point forward kept kind of fumbling and running into more problems so not until 1981 35 years later did the national futures association come about the cool thing about the national futures association was that it's a private sector regulation so instead of having the government say hey this is how you should do things they're saying we decide how we should do things and we're going to self-regulate so great thing about that is it's much more cost efficient to regulate and it also creates a more smoother operation amongst ourselves we don't always have to say hey governor hey state legislator we want to do this this way we can innovate amongst ourselves so sounds weird but i mean maybe we can see some parallels for what's going on in uh define the crypto space here current regulatory climate in digital assets is very very very reactive the first thing i would say is i'm not sure if you've heard about the fatf but fatf is like an overarching international body that has basically said how they're going to regulate aml guidelines for crypto currently this is like a huge big discussion going on amongst all states that's the united states eu all throughout the world and basically it's saying are dow's considered vasts uh basically what are the crypto registration requirements for projects or developers that's happening right now we also have the cftc chair saying hey defy options i don't know what they are exactly but seems like since they're not registered they're probably not legal that's great right like no clue what it is but probably not legal because they're not registered with the cftc uh senate infrastructure bill just passed there's some blunt language in there that kind of could have been more sophisticatedly written and then we also have you know famous sec chair comments about crypto and issues with lending and finance so that's stressful what should we do about it um it may feel like there's not much to do except like yell on twitter about why everything about you know the sec the united states government sucks but instead of you know thinking in those terms why not think about what you can do as builders in your project to actually push forward best practices i deal with this stuff every day and i learned so much from the developers that i work with main things when i say best practices i know it's like a fancy legal term i guess maybe but basically it's like you set up guidelines ethics or ideas that represent the most efficient prudent course of action for a business or industry i feel like developers do this constantly with open sourcing their software it's like how do we make our software more efficient how do we improve upon designs to create better mechanisms or security breaches so areas to think about this and security are you doing audits peer reviews how are you managing prs whitelisting what tokens are you whitelisting are they dogecoins are they tokens with actual liquidity can those tokens be manipulated on secondary markets aside from that the other thing i would say is anything about multi-sigs i'm not sure what your practices are with your multi-sigs but definitely something to think about maybe you're doing a buy back for your token huge area for regulation and to consider how you structure that information and the last but not least is of course anti-money laundering issues this is like one of these very sensitive topics that it has to be discussed because if we don't discuss it the regulations will be decided for us so basically you know go to different forums and you'll find discussions about aml laws and defy so maybe you're not interested in being proactively involved in like an organization or something like that but like i said if you're building you have valuable information to share um i always think first if you have a lawyer or anything check with your lawyer and say am i like should i keep this information private is this like maybe subject to some sort of trade secret is there liability issues if i share this information okay if not i would share it but try to be thoughtful about it i love a good twitter thread i know everyone does but git book publications other meaningful mediums of discourse that are a little bit more hefty and better for like the old guard also very very good to establish best practices and if you want to get more involved on these topics currently i would say the blockchain association d5 defense fund and lex dao are like kind of where it's at but still so much to be done i could see a dow with projects basically forming around the topic and if you are a project that works in the space and wants to start creating that narrative i think maybe even creating a dow where everyone votes and like brings people in through an association would be a very strong method and yeah so that's it if you have any questions or thoughts or anything about like maybe how to build best practices reach out to me yes would you like to do some q a now sure does if anyone have any questions yeah just raise