Why new crypto laws leave DeFi lending without any safety net

A new piece on CoinDesk analyzes a proposed U.S. law called the GENIUS Act and its implications for decentralized finance (DeFi) lending. The article features experts Mike Hathaway and Joseph Quintilian from Ajna, who explain that while the act aims to provide certain consumer protections, its guarantees specifically exclude DeFi lending protocols. This means institutional and retail lenders using DeFi platforms won't have the same regulatory backstop for their loans.

The core argument is that the real risk in DeFi lending isn't just about market volatility or collateral, but about who has the power to change a loan's terms after the money has been lent. The authors point out that even 'fully backed' stablecoins offer no protection against a governance token vote or a malfunctioning price oracle that could alter loan conditions. The takeaway is that investors seeking safety in crypto lending must look beyond just legislation and critically examine the technical and governance structures of the protocols themselves.