The DeFi Education Fund (DEF) has made a significant plea to the US Senate Banking Committee, urging lawmakers to approach DeFi regulation with caution. DEF, supported by an early Uniswap grant, has emphasized the importance of distinguishing between DeFi developers and intermediaries in regulatory efforts to prevent the criminalization of non-custodial software.
In response to the draft Responsible Financial Innovation Act of 2025 (RFIA), DEF, alongside a coalition of prominent crypto firms including a16z Crypto, Jito Labs, Jump Crypto, Paradigm, Multicoin Capital, Solana Policy Institute, Uniswap Foundation, Uniswap Labs, and Variant Fund, outlined a comprehensive framework to protect innovation while upholding national security and consumer protections.
The key pillars proposed by DEF include the differentiation of DeFi developers from intermediaries, clarification on which entities must register with federal authorities, establishment of decentralization criteria, and the promotion of technology-neutral rulemaking. These recommendations have been put forth amidst the Senate’s call for public feedback on the RFIA, building upon the CLARITY Act.
A critical issue raised by DEF in their response concerns the ongoing federal case against Tornado Cash developer Roman Storm. DEF has raised concerns about the current FinCEN guidance being used in the prosecution, warning against treating non-custodial software code as a financial service, setting a potentially dangerous precedent.
The coalition has also stressed the necessity of federal preemption to prevent state-level attacks on DeFi innovation. Without preemption, DEF warns that well-funded traditional financial players could exploit state-level loopholes to target DeFi developers and stifle emerging competition.
In a separate development, Andreessen Horowitz (a16z) has highlighted gaps in the draft crypto regulation bill, urging lawmakers to revise the proposal to avoid legal loopholes and maintain investor protections. The firm argues that the current framework’s treatment of “ancillary assets” poses risks and contradicts established legal standards like the Howey test.
a16z supports the CLARITY Act’s narrower definition of “digital commodities” and advocates for a control-based decentralization model to determine asset classification. According to the firm, decentralization should serve as the threshold for transitioning an asset from a security to a commodity.
In conclusion, DEF and a16z’s calls for careful consideration and revision of DeFi regulation highlight the complexities and challenges in regulating decentralized financial systems. By addressing these concerns and implementing thoughtful regulations, policymakers can foster innovation while safeguarding consumer interests and national security.