✨ Crypto community condemns Senate proposal on DeFi brokers
posted 10 Oct 2025
A leaked Democratic outline proposal that would classify customer-facing DeFi interfaces as "brokers" requiring SEC or CFTC registration. In the crypto industry, the response was sharply critical.
The proposal attempts to regulate anyone designing, deploying, operating or profiting from a DeFi front end under broker rules. The draft includes exemptions for open-source developers who don't profit and protocols that meet a "sufficiently decentralized" standard.
Coinbase CEO Brian Armstrong called it "a bad proposal, plain and simple" and said it would hurt American innovation. The Uniswap Foundation stated the proposal would effectively outlaw DeFi, wallets, and crypto development in the US.
Coinbase CEO Brian Armstrong called it "a bad proposal, plain and simple" and said it would hurt American innovation. The Uniswap Foundation stated the proposal would effectively outlaw DeFi, wallets, and crypto development in the US.
Jake Chervinsky, chief legal officer at Variant, said key parts are "fundamentally broken and unworkable." Summer Mersinger from the Blockchain Association, who previously served as a CFTC commissioner, said the language is impossible to comply with and would force teams to relocate overseas.
Developers say the regulations could push teams to build geo-fenced interfaces, self-hosted clients, command-line tools, and wallet-native swaps. These alternatives would be harder for regulators to monitor and could reduce AML and KYC visibility at on-ramps.
The draft differs from how other jurisdictions handle decentralized protocols. The EU's MiCA framework mostly avoids regulating fully decentralized protocols. The U.K. is pursuing an "activity-based" approach that focuses on regulated functions rather than open-source code. If the Senate draft passes, the U.S. would take a different path from these peers.
The House has already passed a different market-structure bill. Some in the crypto industry want the Senate to work from that House framework instead. Any legislation will need 60 Senate votes to pass, requiring bipartisan support.
Developers say the regulations could push teams to build geo-fenced interfaces, self-hosted clients, command-line tools, and wallet-native swaps. These alternatives would be harder for regulators to monitor and could reduce AML and KYC visibility at on-ramps.
The draft differs from how other jurisdictions handle decentralized protocols. The EU's MiCA framework mostly avoids regulating fully decentralized protocols. The U.K. is pursuing an "activity-based" approach that focuses on regulated functions rather than open-source code. If the Senate draft passes, the U.S. would take a different path from these peers.
The House has already passed a different market-structure bill. Some in the crypto industry want the Senate to work from that House framework instead. Any legislation will need 60 Senate votes to pass, requiring bipartisan support.
