Sen. Warren and Crypto Firms Clash Over Flawed Crypto Bill

The U.S. Senate Banking Committee is facing significant challenges in advancing its proposed market structure bill for cryptocurrencies amid bipartisan criticism and industry pushback. A draft of the Responsible Financial Innovation Act (RFIA), introduced in July by Senate Banking Committee Chair Tim Scott (R-SC) alongside Republicans Cynthia Lummis (R-WY), Bill Hagerty (R-TN), and Bernie Moreno (R-OH), has drawn sharp scrutiny from both Democratic leadership and major participants in the crypto space [1].

Senator Elizabeth Warren (D-MA), the ranking member of the committee, has been a vocal critic of the RFIA, with her staff releasing a detailed fact sheet outlining five major flaws in the legislation. These include concerns that the bill would reduce SEC oversight, expose retirement funds to crypto volatility, inadequately address illicit finance risks, fail to prevent presidential conflicts of interest, and leave investors vulnerable by shifting oversight to the under-resourced Commodity Futures Trading Commission (CFTC) [1].

Notably, the crypto industry has also expressed dissatisfaction with the RFIA. A coalition of 115 organizations, including major platforms such as Coinbase and Uniswap, signed a letter through the DeFi Education Fund (DEF) urging Congress to provide stronger protections for software developers and non-custodial service providers. The letter emphasized the need for legislation that preserves the historical protections for open-source software development and shields developers from being classified as money transmitters for publishing code or providing technical support for decentralized networks [1].

These criticisms highlight a broader challenge in shaping a cohesive regulatory framework for crypto markets. The industry’s concerns stem from the fear that existing draft bills do not sufficiently address regulatory uncertainty, which has contributed to a decline in U.S.-based open-source developers from 25% to 18% over the past four years [1]. The House has already passed its version of market structure legislation in the form of the CLARITY Act (H.R. 3633), which includes provisions such as the Blockchain Regulatory Certainty Act (BRCA) and the Keep Your Coins Act. These measures have received some support from the crypto industry, with the CLARITY Act being described as a significant step forward for digital asset law in the U.S. [1].

Political dynamics further complicate the path forward. President Donald Trump’s substantial crypto holdings, including a $4.1 billion windfall from his WLFI token, have raised concerns about potential conflicts of interest in the legislative process. Analysts suggest that Democratic senators may face pressure to avoid supporting a market structure bill that could inadvertently benefit Trump’s crypto ventures, especially given the broader scope of the legislation compared to the more narrowly focused Genius Act [2].

As the Senate reconvenes, Scott aims to finalize the RFIA by the end of September, but he must navigate strong opposition from both Warren and the crypto industry. The White House has also made it a priority to establish the U.S. as the “crypto capital of the world,” further increasing the stakes in the legislative debate [1]. The outcome of these negotiations will likely determine the regulatory landscape for digital assets in the U.S. and could influence global crypto markets in the years ahead.

Source:

[1] Market Structure Faces Headwinds From Senate Critics (https://www.forbes.com/sites/jasonbrett/2025/09/04/market-structure-faces-headwinds-from-senate-critics-crypto-industry/)

[2] Trump's $4.1bn WLFI windfall throws coming crypto regulation (https://finance.yahoo.com/news/trump-4-1bn-wlfi-windfall-162528629.html)