DeFi Education Fund Urges Senate to Protect Crypto Developers in New Bill
The DeFi Education Fund has issued a strong call to action for the United States Senate Banking Committee, urging them to ensure that crypto developers are adequately protected in the upcoming draft bill. This plea came after the group reviewed the recently published discussion draft on a key crypto market structure bill. The response, signed by several members of the DeFi Education Fund, including a16z Crypto, Paradigm, and Uniswap, emphasized the need for a tech-neutral approach in crafting the Responsible Financial Innovation Act of 2025 (RFA).
The RFA was introduced by Republican leaders on the Senate Banking Committee and is built upon the CLARITY Act passed in the House of Representatives. The discussion draft was released by four Republican senators, including banking committee chairman Tim Scott and digital assets subcommittee chairman Cynthia Lummis. According to Scott, the goal is to provide clear rules for digital assets while promoting innovation.
Importance of Self-Custody Rights
In their response, the DeFi Education Fund highlighted the importance of protecting crypto developers from what they described as "inappropriate regulation meant for intermediaries." They stressed that self-custody rights should be preserved for all Americans. In a letter addressed to the Senate Banking Committee Chairman Tim Scott and Senators Lummis, Hagerty, and Britt, the group urged lawmakers to focus on combating illicit finance without unfairly burdening DeFi innovation.
The Senate Banking Committee welcomed feedback on the draft bill, aiming to build on the Digital Asset Market Clarity Act of 2025. Their goal is to promote innovation in the DeFi industry, which is currently valued at around $141 billion, without compromising consumer protections or financial stability.
Addressing Regulatory Challenges
In their letter, the group also called for updates to FinCEN guidance, especially concerning the issues faced by Tornado Cash developer Roman Storm. They argued that technology consisting solely of non-custodial, non-controlling software should not be regulated as a financial institution or financial intermediary.
Additionally, the crypto lobby group advocated for federal preemption of state laws to ensure optimal protections for crypto developers. They warned that well-resourced traditional financial institutions could exploit the fragmented regulatory landscape by funding or encouraging state-level enforcement actions against DeFi developers—not to protect consumers, but to stifle competition.
Additional Concerns from a16z Crypto
The DeFi Education Fund was not the only entity to respond to the Senate Banking Committee. a16z Crypto submitted its own response, criticizing the bill for potentially undermining investor protections by creating loopholes, particularly regarding "ancillary assets." The firm argues that revamping these assets without changes would be incompatible with existing U.S. Securities law, especially the Howey Test.
a16z Crypto warns that the proposal could allow insiders to exploit exemptions and dump tokens on the public without oversight from regulatory bodies. However, the firm supports a digital commodity model that would establish clear decentralization requirements.
Conclusion
As the DeFi industry continues to grow, the need for balanced and forward-thinking regulation becomes increasingly critical. The calls from the DeFi Education Fund and a16z Crypto highlight the importance of protecting innovation while ensuring consumer safety. The ongoing dialogue between regulators and industry stakeholders will play a crucial role in shaping the future of decentralized finance in the United States.
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