Now that the Senate is reconvening after the August recess, a remarkable consensus is emerging in Washington’s bitter crypto debate: two powerful camps that include Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking Committee and the cryptocurrency industry both agree draft legislation for market structure in the Senate needs improvements. An initial draft of the Responsible Financial Innovation Act (RFIA) of 2025 was released in July by Senator Tim Scott (R-SC), Chair of the Senate Banking Committee, along with Senators Cynthia Lummis (R-WY), Bill Hagerty (R-TN), and Bernie Moreno (R-OH). In previous years, the RFIA was introduced on a bipartisan basis with Lummis and Senator Kirsten Gillibrand (D-NY); however, this draft was introduced only by Senate Republicans.
While many in the crypto ecosystem proclaimed victory over Warren’s anti-crypto army after the Biden Administration ended, the senior Senator from Massachusetts still has sway over many Democrats and sits in a powerful position as the ranking member on the Senate Banking Committee. On August 19th, Senate Banking Democratic staffers under Warren issued a two-page fact sheet highly critical of the RFIA as written. The fact sheet stated, “Republican crypto market structure bill threatens Americans’ retirement savings, increases chances of a financial meltdown, fails to address illicit finance risks and presidential corruption, and leaves crypto investors vulnerable.” On the very same day, Scott was speaking at the Wyoming Blockchain Symposium 2025 where he announced his belief that market structure could pass in spite of Warren’s opposition, citing that at least 12 and up to 18 Senate Democrats are open to the bill.
While opposition from Warren was likely, what came as a surprise was when the DeFi Education Fund (DEF), a non-profit advocating for decentralized finance in Washington D.C., sent a letter last week that included a coalition of 100+ signatories including major players such as az16, Coinbase and Uniswap stating its opposition to the RFIA as drafted. “We, the undersigned organizations—115 crypto builders, investors, and advocates—speak to Congress with one voice: provide robust, nationwide protections for software developers and non-custodial service providers in market structure legislation. Without such protections, we cannot support a market structure bill.”
Scott, who successfully moved the GENIUS Act through the Senate and ultimately to the desk of President Trump where it was signed into law on July 18th, is now facing pressure on market structure from the Ranking Member of his own Committee, the crypto industry itself voicing opposition, combined with the White House’s agenda to see a market structure bill into law along with GENIUS to make the U.S. the ‘crypto capital of the world’. Meanwhile, Scott’s counterpart in the House, Chairman French Hill (R-AR) of the House Financial Services Committee, has already passed its version of market structure known as the CLARITY Act (H.R. 3633) on a signficant bipartisan basis.
Industry’s Ultimatum: Developer Protections or No Support
The letter from the DeFi Education Fund to Senate leaders on the Banking and Agriculture Committees demanded robust, nationwide protections for software developers and non-custodial service providers. Their demands makes clear that market structure legislation must ‘preserve the historical protections afforded to open-source software development’ and shield builders from being regulated as money transmitters simply for publishing code or providing tech support to decentralized networks. According to the letter, current marke structure drafts don’t go far enough, risking the United States’ status in the global blockchain race, already reflected in a drop of US-based open-source developers from 25% to 18% in four years—largely due to regulatory uncertainty. While the letter included support from other trade associations such as the Blockchain Association and the Chamber of Digital Commerce, the letter notably did not include Coin Center. A spokesperson for Coin Center, one of the oldest and long-standing think tanks on cryptocurrencies in Washington D.C., clarified that they value their independence and rarely join coalitions. The DeFi Education Fund did not respond to a request for comment on this story.
Warren’s Alarm Bells: Securities, Stability, Security, Corruption
Senator Warren’s Democratic staff from Senate Banking provided the latest thinking publicly, which attacks the draft RFIA for what they call “five major flaws.” According to the fact sheet, Democratic staff claims the bill as written would dramatically shrink SEC oversight, allowing companies to ‘self-certify’ crypto tokens as ‘ancillary assets’ and escape securities laws. Second, the bill could expose retirement savings and the banking system to crypto-fueled volatility, leading to a financial crisis. Third, the bill relies on studies rather than mandates to address issues in illicit finance, money laundering and terrorist risks. Fourth, the bill fails to prevent presidential conflicts of interest—and the staff highlights Trump’s alleged $620 million made in memecoin profits. Fifth, the bill leaves investors exposed, shifting oversight to the under-resourced Commodities Futures Trading Commission (CFTC) and creating weak disclosure and fraud protections.
The CLARITY Act: A Roadmap—and New Fault Lines
Meanwhile, the House’s Digital Asset Market Clarity Act (CLARITY Act) passed with strong bipartisan support, partly by explicitly protecting non-custodial developers and users’ right to self-custody. Hill commented just a couple of days ago that his long-awaited CLARITY Act could pass within ‘the next few weeks,’. Notably, the bill contained two asks of the industry, to include the Blockchain Regulatory Certainty Act (BRCA), sponsored by Majority Whip Tom Emmer (R-MN) and the Keep Your Coins Act sponsored by Warren Davidson (R-OH). The blockchain industry wrote a joint letter in June for the BRCA to be included in the CLARITY Act. In that letter, Coin Center did join along with the DeFi Education Fund, Solana Policy Institute, The Digital Chamber, Blockchain Association, Crypto Council for Innovation, and the Bitcoin Policy Institute.
The coalition letter from the DeFI Education Fund last week showed appreciation for inclusion of the BRCA and the Keep Your Coins Act in CLARITY, stating, “… These bills recognize the distinctions between intermediated finance and decentralized networks, and protect important American values such as the right to self-custody and freedom to engage in peer-to-peer transactions. Both are essential to making the United States a hub for blockchain innovation.” However, the ask from the crypto industry this time was to make additional critical clarifications are as well as a desire that these protections be provided at a federal level to avoid and pre-empt a patchwork of 50-state laws.
The DeFi Education Fund was extremely positive about the passing of the CLARITY Act, stating at the time “The House’s passage of the CLARITY Act is a significant step forward for digital asset law in the U.S. DeFi Education Fund applauds the inclusion of the Blockchain Regulatory Certainty Act, which protects developers of non-custodial, peer-to-peer software from being mischaracterized as financial institutions, as well as the bill’s distinctions between centralized and decentralized systems and technologies.” However, the organization did cite the need for improvement and was transparent about its desire to press for further changes in the Senate.
What This Means for Market Structure In 2025
There is a great deal of anticipation regarding whether the introduction of the RFIA will reflect any changes based on the desires of both the industry and the staunch opposition from Warren. The crypto industry has become a powerful contingent in Washington D.C., particularly after spending millions on both the Presidential and Congressional campaigns last year and heavy lobbying this year that ultimately led to the passage of the GENIUS Act. The question remains at this point how Scott plans to navigate the market structure bill from collapsing as the momentum for legislation in the first year of Trump’s second administration starts to come to a close.
