{"id":14631,"date":"2025-08-02T08:21:35","date_gmt":"2025-08-02T06:21:35","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=14631"},"modified":"2025-08-02T08:21:35","modified_gmt":"2025-08-02T06:21:35","slug":"defi-education-fund-offers-insights-to-senate-regarding-cryptocurrency-legislation","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/08\/02\/defi-education-fund-offers-insights-to-senate-regarding-cryptocurrency-legislation\/","title":{"rendered":"DeFi Education Fund Offers Insights to Senate Regarding Cryptocurrency Legislation"},"content":{"rendered":"

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The crypto advocacy organization DeFi Education Fund has urged the US Senate Banking Committee to reconsider its approach to regulating the decentralized finance sector after analyzing its recently released discussion draft regarding a crucial crypto market-structure legislation.<\/p>\n

The reply, endorsed on behalf of DeFi Education Fund (DEF) affiliates such as a16z Crypto, Uniswap Labs, and Paradigm, stated that the Responsible Financial Innovation Act of 2025<\/a> (RFA) needs to be developed in a more technology-neutral manner, that crypto developers should be shielded from \u201cinappropriate regulation intended for intermediaries,\u201d and that self-custody rights for every American are \u201cvital.\u201d<\/p>\n

Legislation should \u201ctackle illicit finance but not disproportionately hinder DeFi innovation,\u201d it emphasized in the Friday correspondence<\/a> sent to Senate Banking Committee Chairman Tim Scott and Senators Cynthia Lummis, Bill Hagerty, and Katie Britt.<\/p>\n

Senate Banking Committee appreciated the input<\/h2>\n

The banking committee sought input on the discussion draft to ensure it enhances the Digital Asset Market Clarity Act of 2025<\/a> to foster innovation in the $141 billion DeFi market without jeopardizing consumer protections<\/a> or financial stability.<\/p>\n

Source: <\/em>DeFi Education Fund<\/em><\/a><\/figcaption><\/figure>\n

Safeguarding crypto developers a primary concern<\/h2>\n

The DEF also requested lawmakers to revise FinCEN guidance in the context of Tornado Cash developer <\/a>Roman Storm.<\/p>\n

\u201cThe rulemaking should indicate that technology composed solely of non-custodial, non-controlling software should not be categorized as a financial institution or financial intermediary.\u201d<\/p>\n

Related:<\/strong><\/em> eToro to tokenize the 100 most sought-after US stocks on Ethereum<\/strong><\/em><\/a><\/p>\n

The crypto advocacy group additionally called for federal preemption of state regulations to guarantee uniform protections for crypto developers across the nation.<\/p>\n

\u201cWell-resourced traditional financial entities may take advantage of the disjointed regulatory environment by supporting or promoting state-level enforcement actions against DeFi developers \u2014 not for consumer protection, but to suppress competition,\u201d the DEF argued, stating that federal law should take precedence over conflicting state regulations.<\/p>\n

A16z Crypto provided its own feedback<\/h2>\n

A16z Crypto, the digital currency division of tech-centric venture capital firm a16z, also delivered a separate response to the Senate Banking Committee on Thursday.<\/p>\n

A16z\u2019s primary concern<\/a> regarding the draft cryptocurrency legislation is that it risks compromising investor protections by establishing perilous loopholes \u2014 particularly through its treatment of \u201cancillary assets.\u201d<\/p>\n

The company contends that redefining these assets without significant alterations contradicts current US securities law, especially the Howey test.<\/a> It cautions that the proposal could enable insiders to exploit exemptions and sell tokens to the public without regulatory oversight.<\/p>\n

A16z advocates instead for a \u201cdigital commodity\u201d framework with distinct decentralization criterions.<\/p>\n

Magazine:<\/strong><\/em> Robinhood\u2019s tokenized stocks have stirred up a legal hornet\u2019s nest<\/strong><\/em><\/a><\/p>\n