Crypto lobby warns Senate with ultimatum on developer safeguards

A coalition of more than 100 cryptocurrency companies, investors, and advocacy groups has delivered a firm ultimatum to U.S. lawmakers: they will not support the proposed market structure bill unless it includes clear, federal protections for software developers. The letter, sent on August 27 to the Senate Banking and Agriculture committees, frames these safeguards as non-negotiable.

The alliance—comprising industry heavyweights like Coinbase, Kraken, a16z, and leading lobbying organizations—was coordinated by the DeFi Education Fund. Together, they argued that without explicit legal clarity shielding developers, the legislation risks doing more harm than good.

Why Developer Protections Are a Breaking Point

At the heart of the dispute is whether open-source software creators should fall under the same regulatory frameworks as financial intermediaries such as banks or brokerages. The coalition insists this would be a fundamental misclassification, stifling innovation and driving developers out of the U.S.

The letter highlights a troubling trend: America’s share of open-source blockchain developers has dropped from 25% in 2021 to just 18% in 2025. Industry leaders link this decline directly to regulatory uncertainty and fear of liability.

That fear was sharpened by the recent conviction of Roman Storm, co-creator of the privacy protocol Tornado Cash. Prosecutors successfully argued that Storm was responsible for the platform’s misuse by North Korean hackers and other criminals, even though he neither controlled the protocol nor held user funds. His conviction on charges including conspiracy to launder money and operating an unlicensed money transmission business set a precedent that many in the industry see as dangerous overreach.

What the Industry Wants From Lawmakers

The coalition’s demands are sweeping yet precise. They are asking Congress to ensure that simply writing, publishing, or maintaining blockchain code cannot, on its own, trigger regulation. Without this guarantee, the signatories say, innovation in decentralized finance and blockchain infrastructure will remain under threat.

Specifically, they seek two core protections:

• Federal preemption of state laws to prevent a patchwork of conflicting rules.
• An explicit exemption for developers and non-custodial service providers from being classified as money transmitters under federal statute 18 U.S.C. § 1960.

In their words, only with such assurances can the U.S. provide “an environment in which innovators across America can confidently and safely build financial infrastructure.”

What Comes Next

The Senate’s market structure bill is seen as pivotal for the future of digital assets in the U.S. Without industry backing, its path forward could become far more complicated. For lawmakers, the challenge is balancing accountability for bad actors with protections that encourage innovation.

The crypto sector has made its stance clear: unless developers are shielded from the threat of prosecution for creating neutral code, the industry will withhold its support—an ultimatum that may shape the trajectory of digital finance regulation in the years to come.