DeFi Groups Urge Senate to Revise Crypto Bill to Protect Innovation

The DeFi Education Fund (DEF) has urged U.S. Senate lawmakers to revise the proposed Responsible Financial Innovation Act of 2025 (RFA) to better protect decentralized finance (DeFi) developers and preserve innovation in the industry. In a letter dated July 26, DEF—supported by members including Andreessen Horowitz (a16z), Uniswap Labs, and Paradigm—argued that the current framework imposes “inappropriate regulation meant for intermediaries” on crypto developers, who are not traditional financial intermediaries. The group emphasized the importance of self-custody rights for all Americans and called for a more “tech-neutral” regulatory approach to avoid stifling DeFi’s $141 billion market [1].

DEF also highlighted the case of Tornado Cash developer Roman Storm, urging the Financial Crimes Enforcement Network (FinCEN) to clarify that non-custodial software should not be regulated as a financial institution. It further requested that federal law preempt conflicting state regulations, warning that well-resourced traditional financial institutions could exploit the fragmented landscape to launch enforcement actions against DeFi developers for anti-competitive reasons [1].

The Senate Banking Committee, which released a discussion draft of the RFA, has invited feedback to refine the bill and build on the earlier Digital Asset Market Clarity Act of 2025. While the committee has not yet responded to DEF’s specific recommendations, it has stated its commitment to promoting innovation while maintaining consumer protections and financial stability [1].

Separately, a16z Crypto, the crypto division of venture capital firm Andreessen Horowitz, submitted its own comments to the Senate Banking Committee. The firm criticized the bill for creating loopholes—particularly in the definition of “ancillary assets”—that could undermine investor protections. It warned that redefining these assets without major revisions to U.S. securities law, especially the Howey test, could enable insiders to bypass regulations and dump tokens on the public without oversight. In contrast, a16z proposed a “digital commodity” model with clear decentralization requirements to provide a more robust legal framework [1].

The push for regulatory clarity in the DeFi sector aligns with broader industry calls for a balanced approach that addresses illicit finance while preserving innovation. The Senate Banking Committee’s openness to stakeholder input suggests that the final version of the RFA may incorporate feedback from groups like DEF and a16z, though the extent of changes remains to be seen [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)