The DeFi Education Fund has urged the U.S. Senate Banking Committee to adopt a technology-neutral approach in crafting the Responsible Financial Innovation Act of 2025, emphasizing the need to protect developers and preserve self-custody rights within the decentralized finance (DeFi) ecosystem. The group argues that DeFi creators, who build non-custodial software without control over user assets, should not be treated as traditional financial intermediaries. It further calls for federal preemption to prevent a patchwork of state laws that could undermine innovation and fair competition in the $141 billion DeFi sector [1].
The Senate Banking Committee has acknowledged the input and is working to refine the bill to incorporate tech-neutral principles. This approach is seen as critical to ensuring that regulatory frameworks do not hinder innovation while still maintaining consumer protection and financial stability [1]. The committee’s revised bill is expected to reflect a balanced regulatory model that supports DeFi’s growth without stifling its core attributes, such as user autonomy and decentralization [1].
A16z Crypto has raised concerns about potential flaws in the draft legislation. It warns that the bill, as currently written, may create regulatory loopholes, particularly around the treatment of “ancillary assets,” which could be exploited to evade investor protections. The firm argues that the bill’s definitions conflict with existing U.S. securities law, such as the Howey test, and recommends a “digital commodity” regulatory framework with clear decentralization criteria to ensure clarity and prevent regulatory arbitrage [1].
Federal preemption is a central issue in this debate. The DeFi Education Fund highlights that a unified regulatory standard across states would prevent traditional financial institutions from using inconsistent enforcement to unfairly target DeFi developers. This could help preserve a level playing field and encourage innovation while maintaining necessary consumer safeguards [1].
The Responsible Financial Innovation Act also emphasizes the protection of self-custody rights, ensuring that individuals retain control over their digital assets without unnecessary regulatory interference. This aligns with the broader DeFi movement, which prioritizes user control and decentralization [1].
As the Senate Banking Committee moves forward, stakeholders are watching closely to see whether the final legislation will adequately address concerns from both innovators and regulators. The outcome could shape the future of DeFi in the United States and determine how the sector balances innovation with accountability [1].
Source: [1] DeFi Education Fund Urges Senate to Consider Tech-Neutral Approach in Ethereum Regulation Draft (https://en.coinotag.com/defi-education-fund-urges-senate-to-consider-tech-neutral-approach-in-ethereum-regulation-draft/)
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