DeFi Advocates Push for Revised Crypto Bill to Shield Innovation

A growing coalition of DeFi advocates has urged U.S. lawmakers to revise a key regulatory proposal to better protect developers in the decentralized finance sector. The DeFi Education Fund (DEF), a prominent pro-crypto lobbying group, released a letter on Friday calling for the Responsible Financial Innovation Act of 2025 (RFA) to be adjusted to avoid stifling innovation while maintaining financial safeguards[1]. The letter, signed by DEF members including a16z Crypto, Uniswap Labs, and Paradigm, emphasized the need for a “tech-neutral” approach that shields crypto developers from regulations traditionally applied to intermediaries[1].

The DEF’s recommendations include ensuring that the RFA does not unfairly burden decentralized finance (DeFi) innovation while addressing risks related to illicit financial activity. The group also stressed the importance of self-custody rights for individuals, describing them as “essential” in the DeFi ecosystem[1]. Additionally, the letter urged federal regulators to revise existing Financial Crimes Enforcement Network (FinCEN) guidance, particularly in response to legal actions against developers of non-custodial tools such as Tornado Cash[1].

The DEF also called for federal preemption of conflicting state-level regulations, warning that traditional financial institutions could exploit fragmented legal frameworks to suppress competition. This concern stems from the fear that some state-level enforcement actions might be driven less by consumer protection and more by efforts to hinder DeFi’s growing influence[1].

In parallel, a16z Crypto submitted its own feedback to the Senate Banking Committee, echoing some of the DEF’s concerns while adding a focus on investor protections. The firm criticized the draft bill for potentially creating dangerous regulatory loopholes, particularly regarding the classification of “ancillary assets.” a16z warned that the proposed redefinition of such assets could conflict with existing U.S. securities laws, including the Howey test, potentially allowing insiders to circumvent oversight when distributing tokens[1].

The Senate Banking Committee, which is responsible for shaping the RFA, has invited industry feedback to refine the bill. Committee Chair Tim Scott and other members have been actively engaging with stakeholders to ensure the final legislation supports innovation while upholding consumer protections and financial stability[1]. This collaborative approach reflects the committee’s acknowledgment of the need for thoughtful regulation in a rapidly evolving market.

The DeFi sector has grown to a market size of $141 billion, according to DEF’s statements, and is seen as a critical component of the broader digital asset ecosystem. The lobby group’s push highlights the ongoing tension between regulatory clarity and innovation, with stakeholders arguing for balanced policies that do not deter technological progress or investor confidence[1].

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Source: [1] DeFi Education Fund (https://cointelegraph.com/news/defi-education-fund-gives-feedback-to-senators-on-crypto-bill)