According to Cointelegraph, the DeFi Education Fund (DEF), a prominent crypto lobby group, has urged the U.S. Senate Banking Committee to reconsider its approach to regulating the decentralized finance (DeFi) sector. This call to action follows the release of a discussion draft for a significant crypto market-structure bill. The DEF, representing members such as a16z Crypto, Uniswap Labs, and Paradigm, emphasized that the Responsible Financial Innovation Act of 2025 (RFA) should be crafted in a tech-neutral manner. The group advocates for the protection of crypto developers from regulations intended for intermediaries and underscores the importance of self-custody rights for all Americans.
In a letter addressed to Senate Banking Committee Chairman Tim Scott and Senators Cynthia Lummis, Bill Hagerty, and Katie Britt, the DEF stressed that legislation should tackle illicit finance without stifling DeFi innovation. The Senate Banking Committee had sought feedback on the discussion draft to ensure it complements the Digital Asset Market Clarity Act of 2025, aiming to foster innovation in the $141 billion DeFi industry while safeguarding consumer protections and financial stability.
The DEF also highlighted the need for updated FinCEN guidance, particularly in light of the case involving Tornado Cash developer Roman Storm. The group argues that technology comprising solely non-custodial, non-controlling software should not be classified as a financial institution or intermediary. Furthermore, the DEF called for federal preemption of state laws to provide consistent protections for crypto developers across the nation. They warned that well-funded traditional financial institutions might exploit the fragmented regulatory landscape to hinder DeFi developers under the guise of consumer protection.
In addition to the DEF's response, a16z Crypto, the crypto division of the tech-focused venture capital firm, submitted its own feedback to the Senate Banking Committee. A16z criticized the draft crypto bill for potentially undermining investor protections by creating loopholes, particularly in its treatment of "ancillary assets." The firm contends that redefining these assets without significant changes conflicts with existing U.S. securities law, notably the Howey test. A16z cautioned that the proposal might enable insiders to exploit exemptions and offload tokens onto the public without regulatory oversight. Instead, the firm advocates for a "digital commodity" model with explicit decentralization requirements.