The DeFi Education Fund has called on the US Senate Banking Committee to craft a tech-neutral crypto market bill that protects developers and preserves self-custody rights, ensuring innovation thrives without undue regulatory burdens.
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DeFi Education Fund advocates for technology-neutral legislation to support decentralized finance growth.
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They emphasize protecting crypto developers from regulations designed for intermediaries and urge federal preemption of conflicting state laws.
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A16z Crypto warns the draft bill risks creating loopholes that could undermine investor protections without clear decentralization standards.
DeFi Education Fund urges a tech-neutral crypto bill protecting developers and self-custody rights. Learn how Senate feedback shapes DeFi’s future innovation.
How is the Senate Banking Committee responding to DeFi Education Fund’s feedback on crypto legislation?
The Senate Banking Committee welcomed input on its Responsible Financial Innovation Act of 2025, aiming to balance innovation in the $141 billion DeFi sector with consumer protection and financial stability. The committee seeks to refine the bill by incorporating tech-neutral principles and safeguarding developers, as urged by the DeFi Education Fund.
Why does the DeFi Education Fund emphasize protecting crypto developers in the new bill?
The DeFi Education Fund stresses that crypto developers building non-custodial, non-controlling software should not be regulated as financial intermediaries. They argue that current FinCEN guidance must be updated to prevent inappropriate regulation, citing cases like Tornado Cash developer Roman Storm. Federal preemption of state laws is also recommended to avoid fragmented enforcement that could stifle competition.
What concerns did A16z Crypto raise about the draft crypto market bill?
A16z Crypto criticized the draft for potentially weakening investor protections by creating loopholes, especially regarding “ancillary assets.” They highlight that the bill’s definitions conflict with established US securities law, such as the Howey test, risking exploitation by insiders. A16z advocates for adopting a “digital commodity” framework with clear decentralization criteria to ensure regulatory clarity.
How could federal preemption benefit the crypto developer community?
Federal preemption would create uniform regulatory standards across states, preventing well-funded traditional financial institutions from leveraging fragmented state laws to target DeFi developers unfairly. This approach aims to foster a competitive environment that encourages innovation while maintaining necessary consumer safeguards.
What are the next steps for the Responsible Financial Innovation Act of 2025?
Following the feedback from DeFi Education Fund, A16z Crypto, and other stakeholders, the Senate Banking Committee is expected to revise the bill to better reflect technological neutrality and developer protections. The goal is to finalize legislation that supports DeFi innovation while addressing illicit finance and investor safety.
How does the Responsible Financial Innovation Act impact self-custody rights?
The Act underscores the importance of preserving self-custody rights for all Americans, ensuring users maintain control over their digital assets without unnecessary regulatory interference. This principle aligns with the broader DeFi ethos of decentralization and user empowerment.
Frequently Asked Questions
What changes does the DeFi Education Fund want in crypto regulation?
The Fund advocates for technology-neutral laws that do not unfairly regulate developers or hinder innovation, emphasizing the need for federal preemption to prevent inconsistent state regulations.
How will the new crypto bill affect investor protections?
The bill aims to enhance investor protections, but critics like A16z warn that without clear definitions and decentralization standards, loopholes could allow regulatory evasion.
Key Takeaways
- Tech-Neutral Legislation: Essential for fostering innovation without burdening DeFi developers.
- Developer Protections: Prevents inappropriate regulation of non-custodial software creators.
- Federal Preemption: Ensures consistent nationwide regulatory standards, avoiding fragmented state enforcement.
Conclusion
The DeFi Education Fund’s call for a tech-neutral, developer-friendly crypto bill highlights the need to balance innovation with regulation. As the Senate Banking Committee refines the Responsible Financial Innovation Act of 2025, protecting self-custody rights and preventing regulatory loopholes remain critical to the future of decentralized finance.
