Variant Fund Chief Legal Officer Jake Chervinsky claims that decentralized public block chains remain the legal standard for product development, despite recent announcements of Layer -1 (L1) networks controlled by companies.
Chervinsky argued on X that many new L1s that have been built by companies for product -specific reasons are “unnecessary” and “useless” from a regulation perspective.
He noted that no American regulator has demanded permitted validator sets or built-in compliance tools, and no serious legal efforts in the congress have considered such requirements.
Chervinsky added:
“If you have a great commercial reason to build (or build) a product -specific L1, it will have it. And you are just worried about compliance issues, decentralized public block chains remain De Standaard.”
Circle recently announced its own L1 called Arceeee last month, followed by Stripe revealing pace, a payment-oriented L1 network built in collaboration with Paradigm.
Bedrijfsl1s as legal arbitration
Daring capitalist Revaz Shmertz offered a contrasting vision in response to Chervinsky’s comments, with the argument that business L1s represent a form of legal arbitration.
Shmertz argued that regulatory authorities can act unilaterally through enforcement actions and guidelines, regardless of the inactivity of the congress.
He argued:
“BusinessL1S represent regulatory arbitration, with companies that build blockchain infrastructure that preventively meet the compliance requirements instead of fighting for neutrality at the protocol level.”
Shmertz suggested that this approach creates a “split adoption” in which conforming operating chains operate institutional user situations, while neutral protocols treat retail and defi applications.
He further assessed that the structural reality is that when traditional financing companies can build blockchain rails with known regulatory frameworks, they avoid the need to lobby for crypto-friendly legislation.
The position of Chervinsky emphasizes maintaining basic layer of neutrality principles instead of compromising on decentralization for observed regulatory benefits that regulators have not explicitly requested.
The current business blockchain launch will test whether compliance with regulatory compliance or commercial control ultimately stimulates institutional blockchain acceptance.
At the same time, lobbyists argue for a flexible approach to decentralization for the Securities and Exchange Commission (SEC).
Five core principles
The Defi Education Fund (Def) submitted a letter to the SEC on 18 April and presented five core principles for creating a “Token Safe Harbor” framework that supports decentralized financial initiatives.
Def emphasized that every safe port should use technology-agent approaches to tackle activity risks instead of prescribing rules for specific blockchain models.
The group argued for broad criteria that can already set tokens in a divided way, on condition that they meet decentralization goals instead of evaluating the status only at Genesis.
The position of Chervinsky emphasizes maintaining basic layer of neutrality principles instead of compromising on decentralization for observed regulatory benefits that regulators have not explicitly requested.
The current business blockchain launch will test whether compliance with regulatory compliance or commercial control ultimately stimulates institutional blockchain acceptance.