Crypto lobby group DeFi Education Fund has called on the US Senate Banking Committee to rethink how it plans to regulate the decentralized finance industry after reviewing its recently published discussion draft on a key crypto market-structure bill.
The response, signed on behalf of DeFi Education Fund (DEF) members including a16z Crypto, Uniswap Labs, and Paradigm, said the Responsible Financial Innovation Act of 2025 (RFA) bill should be crafted in a more tech-neutral manner, that crypto developers should be protected from “inappropriate regulation meant for intermediaries,” and that self-custody rights for all Americans are “essential.”
Legislation should “address illicit finance but not unfairly burden DeFi innovation,” it added in the Friday letter addressed to Senate Banking Committee Chairman Tim Scott and Senators Cynthia Lummis, Bill Hagerty, and Katie Britt.
Senate Banking Committee welcomed the feedback
The banking committee requested feedback on the discussion draft to help ensure it builds on the Digital Asset Market Clarity Act of 2025 to promote innovation in the $141 billion DeFi industry without compromising consumer protections or financial stability.
Protecting crypto devs a top priority
The DEF also asked lawmakers to update FinCEN guidance in light of Tornado Cash developer Roman Storm.
“The rulemaking should reflect that technology that solely consists of non-custodial, non-controlling software shall not be regulated as a financial institution or financial intermediary.”
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The crypto lobby group also called for federal preemption of state laws to ensure consistent protections for crypto developers nationwide.
“Well-resourced traditional financial institutions may exploit the fragmented regulatory landscape by funding or encouraging state-level enforcement actions against DeFi developers — not to protect consumers, but to stifle competition,” the DEF said in arguing that federal law should preempt conflicting state regulations.
A16z Crypto made its own submission
A16z Crypto, the crypto arm of tech-focused venture capital firm a16z, also submitted a separate response to the Senate Banking Committee on Thursday.
A16z’s main criticism of the draft crypto bill is that it risks undermining investor protections by creating dangerous loopholes — especially through its treatment of “ancillary assets.”
The firm argues that redefining these assets without major changes is incompatible with existing US securities law, particularly the Howey test. It warns that the proposal could allow insiders to exploit exemptions and dump tokens on the public without regulatory oversight.
A16z instead advocates for a “digital commodity” model with clear decentralization requirements.
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