Now that the Senate has resumed after an August break, a prominent consensus is emerging in Washington’s bitter code debate. Two powerful camps including Senator Elizabeth Warren (D-MA), who includes both Senators of the Senate Banking Committee rankings and Senators in the cryptocurrency industry. The first draft of the 2025 Responsible Financial Innovation Act (RFIA) was released in July by Senator Tim Scott (R-SC), Senators Cynthia Lumith (R-WY), Bill Hagerty (R-TN), and Bernie Moreno (R-OH), chairing the Senate Banking Committee. Over the past few years, the RFIA has been introduced on a bipartisan basis with Lummis and Sen. Kirsten Gillibrand (D-NY). However, this draft was only introduced by Senate Republicans.
Many in the crypto ecosystem have declared Warren’s victory over anti-cryptic forces after the Biden administration ended, but Massachusetts senators are still upsetting many Democrats and sitting in a strong position as a ranking member of the Senate Banking Committee. On August 19th, Senate Bank Democrat staff under Warren issued a two-page fact sheet that was highly critical of the RFIA as written. The fact sheet states, “The Republican Crypto Market Structure Bill threatens Americans’ retirement savings, increases the likelihood of financial meltdowns, fails to address illegal financial risks and presidential corruption, leaving crypto investors vulnerable.” On the same day, Scott was speaking at the Wyoming Blockchain Symposium 2025. There, cited at least 12 to 18 Senate Democrats as open to the bill, and announced their belief that the market structure could pass despite Warren’s opposition.
Opposition from Warren was likely to arise, but the Defi Education Fund (DEF), a nonprofit advocating for distributed finances in Washington, DC, sent a letter last week containing a coalition of 100+ signers, including key players such as AZ16, Coinbase and UnisWap. “We, the signed organisations (115 crypto builders, investors and supporters) will speak to Congress in one voice. We provide robust and national protection for software developers and non-mandatory service providers in the Market Structure Act. Without such protection, we cannot support the Market Structure Act.”
Scott, who ultimately moved the Genius Act to President Trump’s desk via the Senate and signed the law on July 18, is currently facing pressure on market structures from the White House agenda to see market structure bills to sort and integrate “the world capitals” from members of his own committee, where the crypto industry itself expresses opposition. Meanwhile, Scott’s counterpart in the House of Representatives, Chairman of the House of Representatives French Hill (R-AR), Chairman of the House Financial Services Committee, has already passed a version of the market structure known as the Clarity Act (HR 3633) based on a significant bipartisan basis.
Industry Ultimate: No Developer Protection or Support
A letter from the Defi Education Fund to Senate leaders of the Banking and Agriculture Committee called for robust and national protections for software developers and non-mandatory service providers. Their demands make it clear that market structure laws “must preserve the historical protections given to open source software development,” and shield builders are regulated as gold transmitters simply to expose code or provide technical support to distributed networks. According to the letter, the current draft of the Marke structure has not progressed well, putting the US position in the global blockchain race at risk, already reflected in a 25% to 18% decline in US-based open source developers over four years. The letter included support from other industry groups such as the Blockchain Association and the Digital Chamber of Commerce, but the letter did not include a coin centre. A spokesman for Coincenter, one of the oldest and long-time think tanks on Washington, DC, revealed that they value independence and rarely join the coalition. The Defi Education Fund did not respond to requests for comment on the story.
Warren’s Alarm Bell: Securities, Stability, Security, Corruption
Senator Warren’s Democratic staff at Senate Bank has publicly provided the latest thinking. According to the fact sheet, Democrat staff argue that the written bill will dramatically reduce SEC surveillance, allowing businesses to “self-certify” crypto tokens as “additional assets” and escape the securities laws. Second, the bill exposes retirement savings and banking systems to crypto fuel volatility, leading to a financial crisis. Third, the bill is not obligated to address issues of illegal finance, money laundering and terrorist risk, and relies on research. Fourth, the bill cannot prevent a president’s conflict of interest. Staff highlighted the $620 million suspicions made in the profits of Trump’s Memocoin. Fifth, the bill exposes investors and moves to the Commodity Futures Trade Commission (CFTC), which lacks surveillance, creating weak disclosure and fraud protections.
Clarity Act: Roadmap – and new fault lines
Meanwhile, the House of Representatives’ digital asset market, Clarity Act (Clarity Act), passed with strong bipartisan support by explicitly protecting the self-compromising rights of non-obligatory developers and users. Hill commented just a few days ago that his long-awaited act of clarity could pass within “the next few weeks.” In particular, the bill included two requests for two industries sponsored by the Blockchain Regulations Certification Act (BRCA) sponsored by the majority Whip Tom Emmer (R-MN) and Warren Davidson (R-OH), hosted by the Keep Your Coins Act. The blockchain industry wrote a joint letter in June to allow BRCA to be included in the Clarity Act. In that letter, the Coincenter joined together with the Defi Education Fund, the Solana Policy Institute, Digital Chamber, Blockchain Association, Crypto Council for Innovation, and the Bitcoin Policy Institute.
Last week’s coalition letter from the Defi Education Fund expressed appreciation for the inclusion of BRCA, and Keep Your Coins acted explicitly, saying, “…These bills are essentially aware of the distinction between mediated finance and decentralized networks, protecting important American values such as the right to self-responsibility and freedom, and adopting peer-versus-people procedures. However, the question from the crypto industry this time was that they hope that these protections will be provided at the federal level to avoid a patchwork of laws in 50 states and take the lead.
The Defi Education Fund has been very positive about passing the Clarity Act, saying, “The passing of the House of Representatives’ Clarity Act is a key step forward in the Digital Assets Act in the US Defi Education Fund, and we praise the Blockchain Regulation Certification Act. Technology.” However, the organization cited the need for improvement and was transparent about the Senate’s desire to loom further change.
What does this mean for the market structure in 2025?
There are many expectations as to whether the introduction of RFIA will reflect changes based on both industry desires and solid opposition from Warren. The crypto industry has become a strong condition in Washington, DC, especially after millions of people spent last year on both the presidential and congressional campaigns, which ultimately led to the passing of the Genius Act. At this point, Scott remains how he plans to navigate the collapse of the market structure bill as legislation momentum began to end in the first year of Trump’s second administration.
Discover more from Earlybirds Invest
Subscribe to get the latest posts sent to your email.
