"112 Crypto Groups Warn: Protect Developers or Watch Innovation Leave the U.S."

A coalition of 112 cryptocurrency firms, investors, and advocacy groups has issued a unified call to the U.S. Senate, urging the inclusion of robust protections for software developers and non-custodial service providers in the forthcoming market structure legislation. In a letter addressed to the Senate Banking and Agriculture Committees, the signatories emphasized that the absence of such safeguards would render the industry unable to support the bill. The letter underscored that developers should not be misclassified as financial intermediaries under outdated regulatory frameworks, as doing so would hinder innovation and potentially drive talent and development efforts overseas [1].

The letter was signed by key industry players such as Coinbase, Kraken, Ripple, a16z, Uniswap Labs, and nearly all major U.S. crypto lobbying groups, including the Blockchain Association and the Digital Chamber. This effort, described as the “largest crypto advocacy coalition in history,” comes as the Senate returns from its August recess and prepares to advance the market structure bill, which is considered the industry’s top legislative priority [4]. The bill aims to define how the SEC and CFTC will oversee crypto markets, with Senator Cynthia Lummis aiming to move it through the Senate Banking Committee by September and the Agriculture Committee by October [3].

A key concern for the industry centers on the potential liability of developers whose software may be exploited for illicit activities. The recent conviction of Tornado Cash developer Roman Storm has intensified the urgency for legislative clarity. Industry representatives argue that federal protections akin to those provided in the House’s Digital Asset Market Clarity Act must be incorporated into the Senate’s version to ensure that innovation is not stifled. The letter explicitly called for legislation that preserves the historical protections afforded to open-source software development and avoids forcing developers into regulatory categories intended for traditional, intermediated finance [1].

Behind the advocacy push is a growing political and financial influence by the crypto sector. Super PACs such as Fairshake, which raised over $140 million for the 2026 midterms, have already demonstrated the industry’s capacity to sway political outcomes. This influence was evident in Ohio, where crypto-backed efforts played a role in defeating Senate Banking Committee Chair Sherrod Brown last year. While some analysts caution that broader political trends may be more decisive in future elections, the industry’s role in reshaping the political landscape remains significant [2].

The Senate’s ability to pass a market structure bill with developer protections could determine whether the U.S. remains a global leader in crypto innovation. Electric Capital data cited in the letter shows a decline in the U.S. share of open-source blockchain developers—from 25% in 2021 to 18% in 2025—largely attributed to regulatory uncertainty. The industry warned that without clarity, innovation could migrate to other countries with more favorable regulatory environments [1].

With bipartisan support for crypto regulation gaining momentum, the path forward remains uncertain. While the House has already passed the Clarity Act with developer protections, Senate Democrats such as Mark Warner have raised concerns about the potential misuse of decentralized finance (DeFi). Warner’s previous advocacy for applying anti-money laundering (AML) requirements to DeFi platforms reflects a broader tension between innovation and oversight. The outcome of these negotiations will likely shape the regulatory landscape for years to come, determining whether the U.S. can maintain its competitive edge in the digital asset space [1].

Source:

[1] 112 Crypto Firms Urge Senate to Protect Developers (https://cointelegraph.com/news/crypto-industry-urges-senate-developer-protections-market-structure-bill)

[2] Sherrod Brown faces emboldened crypto industry (https://thehill.com/homenews/campaign/5466652-brown-vs-crypto-2026-senate-race)

[4] Unified Crypto Lobbyists: Protect Software Developers (https://www.coindesk.com/policy/2025/08/26/unified-crypto-lobbyists-protect-software-developers-senate-or-we-re-out)