Crypto lobby issues ultimatum to Senate on developer safeguards

A bloc of 112 companies and advocacy groups informed Senate committees that their support for pivotal market structure legislation is entirely contingent on robust, explicit safeguards for software developers, framing it as a dealbreaker.

On August 27, an alliance of 112 crypto firms, investors, and advocacy groups delivered a pointed missive to the Senate Banking and Agriculture committees.

The coalition, a veritable who’s who of the industry, including Coinbase, Kraken, a16z, and every major lobbying shop, presented a unified front with a stark condition: their support for the pivotal market structure bill is wholly dependent on the inclusion of explicit, federally preemptive safeguards for software developers.

The letter, orchestrated by the DeFi Education Fund, stated that without these protections, the industry “cannot support” the legislation, framing it as a non-negotiable term for their endorsement.

The stakes behind the ultimatum

The letter argues that forcing open-source software creators into regulatory frameworks designed for traditional financial intermediaries like banks or brokerages is not just impractical; it’s a fundamental misclassification that could paralyze development.

Notably, the signatories point to a stark brain drain, citing data that the U.S. share of open-source software developers has plummeted from 25% in 2021 to just 18% in 2025, a decline they attribute directly to regulatory uncertainty.

The urgency is compounded by recent legal actions that have sent a chill through the developer community, including the recent conviction of Tornado Cash developer Roman Storm on charges of conspiracy to commit money laundering, operating an unlicensed money transmitter, and violating sanctions law, which served as a sobering precedent.

Prosecutors argued that by creating and maintaining the privacy-focused protocol, Storm was responsible for its misuse by North Korean hackers and other bad actors, despite not controlling the protocol or user funds. The conviction crystallized the industry’s fear that developers could be held criminally liable for the actions of third parties who use their neutral, open-source technology.

The demands

The specific protections the coalition demands are both technical and sweeping. They are asking lawmakers to explicitly shield individuals from regulation solely for the act of creating, publishing, or maintaining blockchain code.

“To create an environment in which innovators across America can confidently and safely build financial infrastructure, the final version of market structure legislation must include explicit federal protections for blockchain infrastructure developers and non-custodial service providers,” the letter read.

Crucially, they seek a federal preemption to prevent a conflicting patchwork of state laws and an explicit carve-out that prevents developers from being misclassified and prosecuted as unlicensed money transmitters under statute 18 U.S.C. § 1960.