DeFi Education Fund Urges Senate To Strengthen Protections In Draft Bill

Crypto lobby group DeFi Education Fund has urged the US Senate Banking Committee to rethink how it intends to regulate the decentralized finance industry. The group called on the Senate to frame a key crypto draft bill in a tech-neutral way and strengthen crypto developer protections. DeFi Education Fund Calls On Senate To Revise Crypto Bill The DeFi Education Fund has asked the US Senate Banking Committee to rethink plans to regulate the decentralized finance industry after reviewing its discussion draft on a crucial key crypto market-structure bill. The group’s response was signed on behalf of other DeFi Education Fund members, a16z Crypto, Uniswap Labs, and Paradigm. It stated that the Responsible Financial Innovation Act of 2025 (RFA) must be crafted in a more tech-neutral manner. It also called on the committee to protect developers from “inappropriate regulation meant for intermediaries,” adding that self-custody rights were essential. The response stated, “DeFi developers and technology should be protected from inappropriate regulation meant for intermediaries. Self-custody protections for all US persons are essential. Legislation should address illicit finance but not unfairly burden DeFi innovation, and should maintain consumer protections and privacy rights.” According to the response, a dynamic and flexible regulatory framework will ensure that decentralized technology and its creators thrive in the US. “With thoughtful market structure legislation, the United States is poised to establish itself as a global leader in digital asset markets and innovation….A dynamic, forward-looking, and flexible regulatory framework will ensure that builders of decentralized technology can thrive in the United States.” The Senate Banking Committee welcomed the feedback as it builds on the Digital Asset Market Clarity Act of 2025 to promote innovation in the DeFi industry. Developer Protection Priority The DeFi Education Fund urged lawmakers to update FinCEN guidance following the trial of Tornado Cash developer Roman Storm. “The rulemaking should reflect that technology that solely consists of non-custodial, non-controlling software shall not be regulated as a financial institution or financial intermediary. It also called for federal preemption of state laws to ensure consistent protection for crypto developers. “Well-resourced traditional financial institutions may exploit the fragmented regulatory landscape by funding or encouraging state-level enforcement actions against DeFi developers — not to protect consumers, but to stifle competition.” a16z Submits Separate Submission a16z Crypto, the crypto arm of venture capital firm a16z, submitted a separate response to the Senate Banking Committee. The firm criticised the bill, stating that it risks undermining investor protections by creating dangerous loopholes through the treatment of “ancillary assets.” It argued that redefining these assets without major changes is incompatible with existing US securities law, particularly the Howey Test. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.