DeFi Education Fund Urges Senators To Reject Proposed Amendments In Crypto Bill Markup

Regulatory storm clouds gather over Capitol Hill as the DeFi Education Fund fires a warning shot across the bow of proposed crypto legislation.

The Pushback

The fund isn't mincing words. It's urging senators to reject a series of amendments currently on the table, arguing they would stifle innovation and miss the mark on effective oversight. The message is clear: this isn't about resisting regulation, but about shaping smart policy that doesn't kneecap a burgeoning financial ecosystem.

Why It Matters

This isn't just another lobbying effort. The markup process is where legislative rubber meets the road. Amendments added here can fundamentally alter a bill's impact, setting precedents that ripple through exchanges, protocols, and wallets for years to come. Get this wrong, and the U.S. risks ceding its competitive edge—a classic move in the grand tradition of watching future markets build elsewhere.

The Stakes for Finance

The proposed changes reportedly target core DeFi mechanics. Think potential constraints on liquidity provisioning, onerous reporting for decentralized autonomous organizations (DAOs), and ambiguous definitions that could ensnare legitimate software developers. The fund contends these measures would create more loopholes than they close, pushing activity offshore into darker corners of the web—exactly what regulators claim they want to avoid.

Looking Ahead

The coming days will test whether lawmakers are listening to industry voices or are swayed by more traditional financial sector pressures. The outcome will signal if America's approach to crypto will be one of structured integration or of blunt-force restriction. One thing's certain: the lobbying fees being paid right now would make a hedge fund manager blush—proving some old finance habits die hard, even in the quest to disrupt finance itself.

Red Flags Emerge From Crypto Market Structure Bill Draft 

In its message, the DeFi Education Fund emphasized the importance of safeguarding the integrity of the emerging DeFi landscape and called on senators to consider the far-reaching consequences of these proposed changes. 

Among the amendments highlighted were Amendment #42, proposed by Senators Reed and Kim, which seeks to authorize the Treasury to sanction smart contracts and centralized platforms involved in illicit activities. 

This amendment raised significant red flags for advocates who worry about its implications for innovation and operational flexibility within the decentralized finance ecosystem.

Another amendment of concern, Amendment #45 by Senator Reed, aims to create a specific definition for digital assets under the Bank Secrecy Act. 

Similarly, Amendment #47, also from Senator Reed, intends to remove a provision related to federal criminal offense concerning unlicensed money transmission. 

These changes, according to the DeFi Education Fund, loom dangerously over the operational landscape for developers and financial institutions that interact with digital assets.

Stifling DeFi Growth

Additionally, Senators Cortez Masto’s proposed amendments, specifically #72 and #73, aim to narrow the definition of non-controlling developers and expand the authority of the Financial Crimes Enforcement Network (FinCEN) alongside the Treasury for blockchain-enabled platforms. 

Amendments #74 and #75 further seek to strengthen existing laws related to money transmission and prohibit transactions involving unlawful DeFi protocols, which the Fund suggests could stifle the industry’s growth.

Amendment #104, proposed by crypto-skeptic Senator Elizabeth Warren, also drew attention by striking a key distribution carve-out for crypto offerings. 

This follows similar calls by Summer Mersinger, CEO of the Blockchain Association, who recently claimed that the “Big Bank Lobby” is pushing Congress to change key provisions of the already enacted GENIUS Act concerning stablecoin rewards, further highlighting the current state of the future of crypto in Congress. 

Featured image from DALL-E, chart from TradingView.com