DeFi Education Fund Calls for Revised Crypto Bill to Protect Developers

The DeFi Education Fund (DEF) has urged U.S. senators to revise the proposed Responsible Financial Innovation Act of 2025 to better protect developers in the decentralized finance (DeFi) space. In a letter to the Senate Banking Committee, DEF emphasized that the current draft does not adequately address the legal and technical complexities of DeFi development. The group, representing major industry players like a16z Crypto, Uniswap Labs, and Paradigm, argued that developers should be shielded from regulations that were designed for traditional financial intermediaries. The DEF also stressed the importance of preserving self-custody rights and ensuring that DeFi innovation is not unduly burdened by regulatory overreach [1].

The letter highlighted concerns that the current framework could expose developers to legal liability for code vulnerabilities or user actions outside their control. This, according to DEF, could deter innovation and collaboration in the open-source crypto ecosystem. The group called for a more tech-neutral regulatory approach that differentiates between custodial and non-custodial technologies, particularly noting the need to update FinCEN guidance in light of past enforcement actions against non-custodial software like Tornado Cash [1].

In a separate submission, a16z Crypto raised concerns about potential loopholes in the bill’s treatment of "ancillary assets." The firm warned that without substantial changes, the bill could create dangerous regulatory gaps that allow insiders to exploit exemptions and distribute tokens without proper oversight. A16z advocated for a "digital commodity" regulatory model that includes clear decentralization requirements, aligning with existing U.S. securities law [1].

The Senate Banking Committee, which is responsible for shaping the final bill, has welcomed the feedback and aims to ensure that the legislation promotes innovation in the $141 billion DeFi industry while maintaining consumer protections and financial stability. DEF also called for federal preemption of state laws to prevent fragmented enforcement actions against DeFi developers, which could be used strategically by traditional financial institutions to stifle competition [1].

Industry observers note that without meaningful input from DeFi stakeholders, the final version of the bill could inadvertently criminalize standard development practices in open-source blockchain projects. This has added urgency to the discussions, with lawmakers now under pressure to refine the draft based on the feedback received. The outcome of these revisions could set a significant precedent for how decentralized systems are regulated in the United States and may shape the future of the DeFi industry [1].

Source:

[1] DeFi Education Fund Gives Advice To Senate On Crypto (https://cointelegraph.com/news/defi-education-fund-gives-feedback-to-senators-on-crypto-bill)

[2] Andreessen Horowitz Pushes Back On Draft Crypto Bill (https://financefeeds.com/andreessen-horowitz-pushes-back-on-draft-crypto-bill-warns-of-loopholes/)