Quick Breakdown
- A bloc of 112 crypto firms and advocacy groups told U.S. senators they will only back market structure legislation if it protects software developers.
- The industry warns that without federal safeguards, developers risk being misclassified and prosecuted under laws meant for financial intermediaries.
- The push follows a sharp decline in U.S.-based open-source developers and the conviction of Tornado Cash developer Roman Storm.
A coalition of more than 100 crypto firms, investors, and advocacy groups has drawn a firm line in Washington they will only back new market structure legislation if it includes ironclad protections for software developers.
Industry’s United Front
On August 27, an alliance of 112 companies including Coinbase, Kraken, a16z, and leading crypto lobbying groups submitted a strongly worded letter to the Senate Banking and Agriculture committees. The message, coordinated by the DeFi Education Fund, framed protections for developers as a dealbreaker.
The letter argued that open-source coders should not be forced into regulatory frameworks designed for banks or brokerages, warning that such a move would misclassify their work and stall innovation across the U.S. blockchain sector.
Developer Exodus and Legal Fears
The groups highlighted an accelerating brain drain, America’s share of open-source developers has dropped from 25% in 2021 to 18% in 2025. They blamed regulatory uncertainty and high-profile prosecutions, including the conviction of Tornado Cash developer Roman Storm.
Storm was found guilty of money laundering and sanctions violations after prosecutors claimed his code enabled North Korean hackers and other bad actors even though he never controlled the protocol or user funds. The case, they argue, shows the risks of criminalizing neutral software development.
The Demands: Clear, Federal Protection
The coalition insists the final legislation must shield developers from liability for creating or publishing blockchain code, provide federal preemption to prevent a patchwork of state-by-state rules and ensure coders are not prosecuted as unlicensed money transmitters under 18 U.S.C. §1960.
The letter concluded that without these explicit safeguards, the crypto industry “cannot support” the market structure bill—a rare display of unity from a sector often divided over policy.
Meanwhile, the US Senate is aiming to pass comprehensive legislation governing the digital asset market structure before the end of September, according to Senate Banking Committee Chair Tim Scott.
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