DeFi Developer Protections and Ethereum L2 Strategy Draw Scrutiny

The DeFi Education Fund says decentralized finance relies on open-source, non-custodial infrastructure and that treating developers who do not control customer assets as money transmitters could stifle innovation. A bipartisan group of US House members introduced PIBDA on February 26, 2026, seeking to clarify Section 1960 of the criminal code. Separately, Yellow Network argues that Ethereum’s rollup-based scaling strategy has fragmented liquidity and created risks associated with cross-chain bridges.

As of April 22, 2026, Base and Arbitrum accounted for 77% of total value locked in Ethereum L2 DeFi, while usage of smaller rollups had fallen 61% since June 2025. Cross-chain bridge exploits have caused $2.5 billion in losses since 2021. After a vulnerability in KelpDAO’s rsETH caused $292 million in losses on April 18, Aave’s share of total value locked fell from 51.5% in February to 39%, while AAVE dropped 50% from its January high.