U.S. Senate Urged by 110+ Crypto Firms to Protect Software Developers

At the heart of the coalition’s concern is the protection of software developers and builders of decentralized financial systems, especially those creating non-custodial tools where users hold their own keys and assets. These individuals and teams typically have no control over how end-users utilize their code, yet they face legal uncertainty under interpretations of money transmission laws. DEF and its partners argue that overbroad enforcement of these provisions risks unfairly characterizing benign actors as liable for transactions they neither direct nor manage

Hayden Adams, CEO of Uniswap Labs, took to X and stated, "We just sent the largest crypto coalition letter ever to Congress!!"

This letter represents a dramatic escalation in DEF’s advocacy, building on earlier interventions. In April, DEF issued “Guiding Principles for a Token Safe Harbor Framework” to the SEC’s Crypto Task Force, urging protections that differentiate between bad actors and developers acting in good faith. And on August 1, 2025, DEF responded to the Senate’s Request for Information tied to the Responsible Financial Innovation Act (RFIA), urging clarity, federal preemption for developer protections, self-custody rights, and a tech-neutral framework.

As the Senate moves closer toward finalizing crypto market structure rules, growing developer opposition signals mounting political risk.

At the same time, the GENIUS Act has been signed into law, establishing federal rules for stablecoins. Notably, it introduces strict reserve requirements, greater oversight, and transparency standards. Yet, for the crypto community, the lack of developer safe harbors remains a critical gap.

The coalition stresses that legal clarity is essential for innovation. Without rules that clearly distinguish between developers of open-source tools and custodial intermediaries, talented engineers may choose to avoid jurisdictions like the U.S. altogether. This risks pushing innovation offshore, weakening the country’s leadership in emerging financial technologies, and delaying DeFi maturation.

They also argue that preserving self-custody rights depends on protecting the developers who build non-custodial systems. If developers face liability for actions beyond their control, the very principle of self-custody could collapse under regulatory pressure. Protecting developers is therefore not a side issue, it is central to the continuation of decentralized finance.

Another concern is the chilling effect on open-source development. Recent actions from both the SEC and the Department of Justice have raised the possibility that developers could be punished for how others use their code. The coalition likens this to prior restraint on speech, since publishing code is a form of protected expression. Without safeguards, fewer developers will feel safe contributing to open-source protocols, ultimately reducing transparency and security in the crypto ecosystem.

The coalition’s notice will test policymakers’ commitment to both regulatory clarity and innovation freedom. Without legislated guardrails, developers and service providers may refrain from engaging in U.S. markets, and key DeFi infrastructure could remain in legal limbo. This would create a patchwork of rules internationally, fueling regulatory arbitrage and undermining coordinated oversight. At the same time, industry-lawmaker negotiations may increasingly shift toward including affirmative developer protections as a condition for legislative progress.