A16z, DEF call for revisions to DeFi regulation bill

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Mirjan Hipolito

02.08.2025

A16z, DEF call for revisions to DeFi regulation bill — DeFi advocates demand legal clarity, decentralization-based rules

The DeFi Education Fund (DEF), along with leading developers and investors, has presented a framework response to the 2025 Responsible Financial Innovation Act (RFIA), arguing it can safeguard innovation without compromising national security or consumer protection.

Joining DEF in signing the formal response to the RFIA were a16z Crypto, Jito Labs, Jump Crypto, Paradigm, Multicoin Capital, Solana Policy Institute, Uniswap Foundation, Uniswap Labs, and Variant Fund.

DEF’s response is built around four key principles:

- Clear distinction between DeFi developers and intermediaries,

- Identifying which entities must register with federal authorities,

- Establishing decentralization criteria,

- Promoting technologically neutral rulemaking.

“We’re proud to have leading developers, investors, and DeFi advocates contribute,” DEF posted on X, listing the signatories.

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But we saved everything 🙂.

These proposals come amid the Senate’s call for public input on the RFIA, which builds on the previously introduced CLARITY Act.

While lawmakers seek to balance market growth with financial oversight, DEF argues that nuanced understanding of decentralized systems is essential.

A central issue raised in the letter is the ongoing federal case against Tornado Cash developer Roman Storm. DEF criticizes the FinCEN guidance being used in the prosecution, warning that treating non-custodial code as a financial service sets a dangerous precedent.

“Software that does not take custody or control should not be regulated as an intermediary,” DEF states, calling for legal clarity.

The coalition also stresses the need for federal preemption to override conflicting state laws. Without it, DEF argues, well-funded traditional finance players could exploit legal loopholes to pursue DeFi developers and suppress emerging competition.

Law needs revision

Earlier this week, Andreessen Horowitz (a16z) also urged lawmakers to revise the proposed crypto regulation framework, warning that the current draft could introduce legal gaps and weaken investor protection.

Although intended to clarify digital asset regulations, a16z says the current RFIA framework poses legal and structural risks, especially regarding “ancillary assets”—tokens sold with investment contracts that typically don’t grant ownership, dividends, or governance rights.

a16z argued that relying on this category as a legal foundation is problematic unless substantially revised.

The firm believes the framework contradicts the Howey Test, a long-standing legal standard for determining whether an asset qualifies as a security under U.S. law.

“Rewriting the Howey Test,” the letter states, “would depart from settled law and endanger investor protection.”

Instead, a16z supports the narrower definition of “digital commodities” from the CLARITY Act and recommends anchoring regulation in a control-based decentralization model—assessing whether any party retains unilateral operational, financial, or managerial control over a blockchain system.

According to the firm, decentralization should mark the point at which a token ceases to be a security and becomes a commodity.

As we wrote, U.S. Senate unveils CLARITY bill to regulate digital assets

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