DeFi Leaders Issue Ultimatum: ’No Developer Protection, No Bill’ in Landmark Legal Standoff

Decentralized finance pioneers draw line in regulatory sand—demand ironclad legal shields before accepting any new legislation.

The Core Demand

Top protocol architects and DAO founders unite behind single message: legislation without explicit developer safeguards gets rejected at the gate. They argue current proposals expose builders to unreasonable liability for code running on decentralized networks—where no single entity holds control.

Regulatory Pushback

Lawmakers scramble to address DeFi's explosive growth while maintaining innovation momentum. Industry insiders whisper about drafted bills sitting in drawers—awaiting compromise language that satisfies both regulators and developers.

Market Impact

Traders watch nervously as regulatory uncertainty creates sideways momentum—yet another case of traditional finance moving at geological speeds while crypto operates at light speed. The standoff highlights fundamental tension between innovation and protection—with billions in protocol value hanging in the balance.

No safeguards? No deal. DeFi just taught regulators the oldest crypto lesson: code may be law, but good luck enforcing bad laws on good code.

Key Takeaways 

DeFi stakeholders have asked Congress to include developer protections in the market structure bill. Otherwise, they warned that they WOULD withdraw support for the legislation. 

The DeFi community appears keen on protecting neutral developers and builders from being charged like Tornado Cash’s Roman Storm. 

In a letter to the Senate, a group of 115 members led by DeFi Fund Education Fund (DEF), urged Congress to ensure the market structure bill offers ‘nationwide protections for software developers and non-custodial providers.’

They warned that they won’t support the legislation if their demand aren’t met.  

“Without such protections, we cannot support a market structure bill.”

The group added that U.S developers have declined by 7% in the past four years due to uncertainty. 

“The total share of open-source software developers in the United States dropped from 25% in 2021 to 18% in 2025– a trend largely attributed to the lack of regulatory certainty for software development.”

If not reversed, the trend could dent President Donald Trump’s vision of making America the crypto capital of the world. 

Crypto bill attracts mixed views

A similar stance was taken by most crypto legal minds.

Jake Chervinsky, chief legal officer at crypto VC Variant Fund, said the upcoming legislation should shield developers from falling back to ‘Biden-era hostility.’

“The bill must protect developers from a return to Biden-era hostility, full stop…no dev protections, no bill.”

For her part, Amanda Tuminelli, the Executive Director and legal chief at DEF, quipped that developers should not be ‘misclassified’ and forced into regulatory categories meant for TradFi financial intermediaries. 

Undoubtedly, Congress will face a tough balancing act as different factions fight for favourable terms in the crypto bill.

Notably, the banking sector has ramped up pressure for the blockage of interest accrued to payment stablecoins, decrying that it was a threat to the banks. 

Traditional stock exchanges also warned that tokenisation, especially on-chain stocks, is a ‘risky mimic’ which could affect equity market integrity. 

As a result, they called on Congress and regulators to ensure that on-chain stock issuers adhere to similar regulatory standards. 

At the same time, the overall crypto lobby has increased its war chest ahead of the 2026 midterms, putting Congress, especially anti-crypto lawmakers, in a tough spot. 

Meanwhile, the market structure legislation will resume discussion in September. 

The Senate Agriculture Committee, which oversees CFTC, will release its draft early next month.

Notably, jurisdictional conflicts between the SEC and CFTC are expected to be resolved by the end of next month. This resolution could help streamline oversight in the digital asset sector.

While some remain optimistic about passing legislation by year-end, others are more cautious. They warn that delays could extend the timeline for the market structure bill into next year.