Crypto Groups Urge Senate to Slow DeFi Regulation to Avoid Harming Innovation

Industry groups representing the cryptocurrency sector have urged the U.S. Senate to adopt a cautious approach in regulating decentralized finance (DeFi), highlighting concerns that overregulation could hinder innovation and push activity overseas [1]. The DeFi Education Fund (DEF), along with partners including Andreessen Horowitz, Solana Policy Institute, and Uniswap Labs, submitted comments to the Senate Banking Committee regarding the draft Responsible Financial Innovation Act of 2025 (RFIA). They emphasized that DeFi developers should not face the same regulatory treatment as centralized entities, as open-source and non-custodial platforms differ fundamentally in how they operate [1].

The groups stressed the importance of technology-neutral regulations, arguing that rules should focus on the outcomes in the financial sector rather than the specific technologies used. This, they believe, would help regulations remain relevant as technology evolves [1]. Another key point raised was the right to self-custody, with the letter reinforcing the principle that users should retain full control over their digital assets without relying on third-party services. This is seen as a core element of digital financial freedom [1].

In addition, the letter advocated for federal laws to supersede state-level regulations to avoid a fragmented regulatory environment. This could streamline compliance for DeFi companies and reduce legal uncertainty. While the signatories supported efforts to curb illegal financial activity, they warned that excessive regulation could limit the economic potential of DeFi and slow technological progress [1].

Parallel to Senate discussions, the U.S. House of Representatives has moved forward with its own regulatory proposals, such as the CLARITY Act. However, the Senate remains more measured in its approach, influenced by industry lobbying and the need to balance innovation with financial stability [4]. A slower, more deliberate regulatory process is seen by some as beneficial in the long term, potentially fostering institutional adoption and clearer compliance pathways for digital asset projects [3].

Industry observers also note that the Trump administration previously proposed a report supporting clear oversight from the SEC and CFTC, with a focus on modernizing banking and encouraging DeFi adoption. This aligns with the broader call for regulatory clarity rather than enforcement-driven strategies [6]. Some industry leaders suggest that moving away from a “regulation-by-enforcement” model could position the U.S. as a global leader in the next phase of financial innovation [7].

As the Senate continues its discussions, the outcome will likely shape the future of DeFi within the U.S. financial landscape. The industry is seeking a balanced regulatory framework that supports innovation while ensuring investor protection and financial stability [1].

Source:

[1] https://www.livebitcoinnews.com/crypto-groups-ask-senate-to-go-slow-on-defi-rules/

[4] https://www.tradingview.com/symbols/OKX-BTCUSD1%21/ideas/?contract=BTCUSD15Q2025

[3] https://www.instagram.com/p/DMzaHR8hof0/

[6] https://www.mexc.com/news/ada-might-take-years-to-hit-10-but-this-coin-could-soar-from-below-0-003-to-0-30-fast/63391

[7] https://mlq.ai/news/