DeFi developers face uncertain protection in Senate bill
I think we’re at a critical point with this crypto market structure legislation. The industry has been pushing for this bill for years, but now there’s a real chance they might walk away from it. That’s surprising, right? After all that work.
It comes down to whether software developers working on decentralized finance protocols get proper legal protection. The DeFi Education Fund’s Amanda Tuminelli told CoinDesk they’re hopeful, but she has concerns. Traditional finance groups, particularly SIFMA, seem to be pushing back on what the DeFi sector wants.
Industry united on developer protection
Back in August, something significant happened. The entire crypto industry came together and signed a letter saying they wouldn’t support a market structure bill without developer protections. That’s Coinbase, Kraken, Ripple, a16z, Uniswap Labs—over a hundred organizations. Many of these are more centralized companies, which makes their support for DeFi protections interesting.
They’re not just making noise. For DeFi insiders, these protections are fundamental. They see them as make-or-break for their technology’s survival. When the legislative text comes out in the next few days, that’s where everyone will be looking.
Traditional finance resistance
What’s complicating things is the traditional financial sector’s position. SIFMA hasn’t been very vocal publicly about crypto, apart from some comments on tokenized securities. But according to industry leaders, they’re actively pushing back on DeFi’s requests in private meetings.
Tuminelli mentioned working productively with Senate staff and SIFMA, but there’s a disconnect. She worries that traditional finance participants “are just not on the same page as us when it comes to promoting innovation and protecting innovation.” That’s a polite way of saying they might not understand what DeFi actually needs to survive.
Legislative timeline and uncertainty
The Senate committees are planning votes next week, which is a big step toward final consideration. But there’s political tension too. Republicans are moving quickly, which frustrates Democratic negotiators. Senator Cynthia Lummis even posted what looks like the first page of a working draft on social media.
Whether the industry will be tested on its DeFi support depends entirely on the language that emerges soon. The coming hours and days matter. If the protections aren’t there, all that advocacy work might lead to opposition instead of support.
It’s a strange position for an industry to be in—potentially opposing legislation they’ve wanted for so long. But perhaps that shows how important these DeFi protections really are. They’re not just nice-to-haves; the industry seems to view them as essential for the technology’s future.
I’m watching to see if traditional finance groups can find common ground with DeFi advocates. Or if this becomes another example of established financial interests not quite understanding new technology. The next draft will tell us a lot.
