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Crypto lobby group DeFi Education Fund (DEF) has urged the US Senate Banking Committee to revise its approach to regulating the decentralized finance industry, following feedback provided on a key proposed crypto market-structure bill.
Core Demands Regarding Proposed Bill
The DEF, representing members including a16z Crypto, Uniswap Labs, and Paradigm, stated in a Friday letter that the “Responsible Financial Innovation Act of 2025” (RFA) should be redesigned with greater tech-neutrality, explicitly protect developers from “inappropriate regulation” typically applied to intermediaries, and recognize self-custody rights for all citizens as “essential.”
The group also emphasized that legislation should combat illicit finance without unfairly hindering DeFi innovation.
The Senate Banking Committee sought industry feedback on its discussion draft to inform the development of the RFA, which is intended to provide market structure for the $141 billion DeFi industry while supporting innovation, consumer protections, and financial stability.
Focus on Developer Protections
The DEF specifically called on lawmakers to update guidance from the Financial Crimes Enforcement Network (FinCEN) in light of high-profile cases like that of Tornado Cash developer Roman Storm.
They argued, “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.”
Advocacy for Federal Preemption
The DEF also urged the adoption of federal preemption of state-level crypto regulations. Their argument centers on preventing large traditional financial institutions from leveraging fragmented state laws to potentially target and stifle DeFi developers.
A16z Crypto Submits Separate Analysis
Separately, a16z Crypto submitted a response detailing criticisms regarding the draft bill.
a16z contended the RFA draft risks creating investor protection loopholes, particularly by inadequately defining or treating “ancillary assets” without significant changes to existing securities law (like the Howey test).
The firm worries this could enable the exploitation of exemptions, allowing unregulated token dumping. They advocate instead for a “digital commodity” framework with rigorous decentralization requirements.
