Key Takeaways:
- 115 crypto firms, investors, and advocates signed a coalition letter demanding nationwide protections for software developers and non-custodial service providers.
- The DeFi Education Fund (DEF) led the initiative, warning Congress it cannot support any market structure bill without explicit safeguards.
- U.S.-based open-source developers have already dropped from 25% in 2021 to 18% in 2025, underscoring risks from regulatory uncertainty.
A powerful coalition of more than 110 crypto entities has called on U.S. lawmakers to prioritize software developer protections in upcoming digital asset legislation. The group’s message is clear: unless the final framework shields developers and non-custodial providers from being misclassified as financial intermediaries, the industry cannot back the bill.
The Coalition Letter: A United Industry Front
On August 27, the DeFi Education Fund (DEF) and 114-cryptocurrency builders, investors, and advocacy groups submitted a joint letter to the Senate Banking Committee and the Senate Agriculture Committee.
The letter notes that developers that construct open-source blockchain-based infrastructure should not be subjected to the same onerous regulatory requirements as banks or custodians. The coalition demands that law has to:
- Protect open-source software developers and non-custodial service providers.
- Recognize blockchain networks as neutral infrastructure.
- Preempt conflicting state-level rules to avoid a patchwork system.
The message comes amid growing tension between traditional finance lobbies and crypto advocates. Without these protections, the coalition warns, U.S. innovation risks falling further behind global competitors.
Read More: U.S. Senate Passes the GENIUS Act — What’s Really Inside the $3.7 Trillion Crypto Bill?
Why Developer Protections Matter
The U.S. has historically been a global hub for software innovation, from the rise of the internet to artificial intelligence. But that leadership is slipping. According to the White House’s digital assets report, America’s share of open-source developers has dropped from 25% in 2021 to 18% in 2025.
Industry leaders point to regulatory uncertainty as a key factor driving developers abroad. The letter notes that treating blockchain developers as if they were financial institutions is both “unworkable and counterproductive.”
By contrast, countries in Asia and Europe are increasingly positioning themselves as friendlier jurisdictions for blockchain talent. For the U.S. to become the “crypto capital of the world,” advocates argue, legislation must explicitly clarify that publishing code or enabling decentralized access is not equivalent to running a money-transmitting business.
Congressional Momentum and Industry Concerns
Lawmakers in Washington are already debating multiple drafts of market structure bills. Both the House and Senate have included elements such as the Blockchain Regulatory Certainty Act and the Keep Your Coins Act, which protect the right to self-custody and peer-to-peer transactions.
However, industry voices stress that these provisions are not enough. The coalition is pressing for federal, preemptive protections to ensure consistency nationwide and avoid 50 different state interpretations.
Read More: Senate to Fast-Track Landmark Stablecoin Reform
Bipartisan Support but Stronger Action Needed
Conservation of the developers is not the prerogative of one or the other bank. The CLARITY Act has already demonstrated momentum in protecting developers and non-custodial providers having passed the House on a bipartisan supermajority of 294 votes.
However, the coalition says that the Senate should take this farther. The idea is that publishers are not supposed to be exposed to liability because of publication of blockchain code or training of tools, which allows users to contact decentralized networks directly.
The final legislation must:
- Guarantee that blockchain infrastructure developers are not regulated as custodians if they do not control user funds.
- Provide explicit federal protection that supersedes conflicting state laws.
- Preserve the right to open-source development and peer-to-peer transactions.
Addressing these requirements will allow Congress to develop a healthy regulatory framework in which innovation can thrive without undermining consumer protection.
The letter by the coalition provides additional strength to negotiations given that the Senate has a series of set deadlines to act on the legislation of market structure. Now its up to lawmakers to decide whether or not they will put in harsher developer protections to the final draft.
