Crypto leaders urge U.S. Senate to avoid overregulating DeFi, warning it could hinder innovation and affect the industry’s future growth.
Several major players in the cryptocurrency industry are urging the U.S. Senate to exercise caution when creating new rules for decentralized finance (DeFi). The DeFi Education Fund (DEF), along with some established companies such as Andreessen Horowitz (a16z), Solana Policy Institute, and Uniswap Labs, has presented their opinions to the Senate Banking Committee. They were responding to a call for comments on the draft of the Responsible Financial Innovation Act of 2025 (RFIA).
DEF Warns New Crypto Bill May Harm DeFi Innovation
This bill is an amendment to a crypto law that was proposed in 2022. The Senate is seeking comments that will help it ensure that the passed legislation will favor innovation as well as financial stability and consumer protection. In their remarks, DEF and its partners thanked the government and were happy to be part of the discussion. However, they had grave reservations about how DeFi is being addressed in the draft.
In the first place, the groups stated that DeFi developers could not be subjected to the same treatment as centralized companies. According to them, developers of open-source and non-custodial software should not be subjected to the same regulations as those who have direct control over user funds. They believe that the same rules will deter innovation and make development move out of the country.
Then, the proponents of the cryptocurrencies stressed the importance of technology-neutral regulations. That is to say that the regulation must be based on what is happening in the financial field, not on which technology is being employed. They consider that this would assist in keeping the laws current despite changes in technology in the long run.
Another major point was the right to self-custody. The groups were highly supportive of the notion that users must always have the choice to hold their digital assets, without needing third-party services. This is, as they referred to, a significant aspect of financial freedom in the digital age.
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DeFi Supporters Seek Balanced Rules Amid Senate Talks
The letter also asked the Senate to make federal laws superior to state laws. Otherwise, a patchwork of various state-level regulations would bring confusion and complicate the ability of DeFi companies to operate legally. Standardization would simplify the situation and increase effectiveness with national rules and regulations.
Notably, DEF and the other signers concurred that illegal financial activity should be halted. They cautioned that overregulation could harm DeFi innovation. It might also limit the technology’s potential to boost the economy.
With the Senate still in discussions on the RFIA, the implication could be a significant one concerning the future of crypto in the United States. DeFi advocates hope lawmakers will strike a balance between innovation and user safety. They want regulations that protect without stifling growth. Companies like DEF have submitted responses to support this effort. These inputs aim to help the Senate move closer to effective, balanced regulation.
There are more changes and debates expected in the following months. However, the choices taken at this time will determine the future of DeFi in the U.S. financial system in the years to come.
