The DeFi Debrief

Week of May 5, 2025: DEF & Uniswap Labs on Capitol Hill; DEF's 1960 Petition; Update in Tornado Cash; UK Cryptoasset Regulatory Framework; Congressional Updates

DeFi Education Fund & Uniswap Labs Joint-Briefing on Capitol Hill 

Last week, DeFi Education Fund, in collaboration with Uniswap Labs, held a DeFi 101 briefing on Capitol Hill to educate Hill staff on decentralized finance. The DeFi 101 briefing presented the basics of DeFi, its differences from the traditional financial system, and important policy considerations as Congress advances a regulatory framework for digital assets in the United States. 

After presentations from MC Lader, Chief Operating Officer at Uniswap Labs, and Lizandro Pieper, Research Director at DeFi Education Fund, Hill staff had the opportunity to view a “DeFi demo” that explained how DeFi works and how to use Uniswap. DEF also distributed our DeFi 101 Packet and one pagers on Section 1960. 

DEF was grateful to work with Uniswap Labs to make this happen. As always, DEF encourages all builders and developers in DeFi to reach out and communicate your message to your representatives DEF will continue to educate members of Congress and their staff on issues critical to the future of DeFi, especially as policy debate rapidly unfolds around a regulatory framework for digital assets in the United States, including payment stablecoins and market structure legislation. 

DeFi Education Fund Launches Petition on Section 1960 

On April 28, 2025, DeFi Education Fund launched a petition calling on the Trump administration to end the lawless prosecution of software developers in the U.S. and it now has over 300 signatures from leaders in the digital assets industry.

The petition explains: “Under a novel and unprecedented theory, the SDNY is attempting to hold software developers criminally liable for how others use their code — even when the developers have no control over those third parties, or user assets. This is not only absurd in principle, but it sets a precedent that potentially chills all crypto development in the United States. Such a framework threatens the very foundation of technological innovation.” The actions from the DOJ contradicted clear 2019 FinCEN guidance: developers of self-custodial, peer-to-peer protocols are NOT money transmitters.

We hope you will join us in elevating the importance of this issue and in urging the Trump Administration to act expeditiously by endorsing this petition at the link below.

Please consider signing: https://section1960.defieducationfund.org/

Western District of Texas Order on Tornado Cash Sanctions 

On April 28, 2025, the District Court for the Western District of Texas ruled that the U.S. Treasury’s Office of Foreign Assets Control (OFAC) acted unlawfully when it sanctioned Tornado Cash, a decentralized noncustodial protocol on the Ethereum blockchain, and permanently barred the agency from enforcing the previously-issued sanctions.

Last November, the Fifth Circuit held that OFAC acted unlawfully when it added the Tornado Cash smart contract addresses to the Specially Designated Nationals (SDN) list. Although OFAC removed the Tornado Cash sanctions recently, it claimed that they delisted as a matter of their “discretion,” implying that they retained the power to reimpose sanctions later. Last week’s ruling by the Western District of Texas confirmed that OFAC is permanently enjoined from enforcing the sanctions on Tornado Cash in accordance with the Fifth Circuit ruling. 

The decision marks a win for DeFi and the development of noncustodial software. It establishes a legal precedent that autonomous and immutable smart contracts are not “property” or “entities.” However, the developers of Tornado Cash remain subject to criminal prosecution and one of the developers, Roman Semenov, continues to be listed as an SDN. 

HM Treasury Releases Draft Cryptoasset Regulatory Framework 

Last week, His Majesty's Treasury Chancellor Rachel Reeves announced the release of draft rules creating a “comprehensive regulatory regime for crypto assets” in the United Kingdom, and expressed a desire to create a compatible framework with the U.S. that would promote the responsible adoption of digital assets. 

On April 29, 2025, HM Treasury released a draft policy paper of forthcoming statutory provisions to create new regulated activities for cryptoassets. The documents will be added to the draft Financial Services and Markets Act of 2000 (Cryptoassets) Order 2025 (“the SI”) in order to aid the review of its provisions. Importantly, the final instrument may change before it is laid before Parliament. 

The draft statutory instruments order does not include special provisions for decentralized finance (DeFi) models. The document states: “Where specified activities are being undertaken on a truly decentrali[z]ed basis, i.e. where there is no person that could be seen to be undertaking the activity by way of business, then requirements to seek authorisation will not be applicable. The FCA will determine in any given case whether there is a sufficiently controlling party or parties that ought to be subject to the requirement to be authorised in line with Section 19 of FSMA.” 

DeFi Education Fund applauds HM Treasury for recognizing the absence of intermediaries in DeFi, and appealing to the concept of a “sufficiently controlling party.” We hope that HM Treasury will continue on this path as productive regulation requires thoughtful and well-executed exclusions for DeFi from rules intended for centralized financial intermediaries. Establishing a clear differentiation between DeFi and intermediated finance in regulations will help to solidify the UK’s position as a leader in digital assets. 

Congressional Updates

Deploying American Blockchains Act Advanced out of Senate Markup 

On April 30, 2025, the Senate Committee on Commerce, Science, and Transportation held a markup of several pieces of legislation and advanced the Deploying American Blockchains Act out of Committee by voice vote. 

The legislation, co-sponsored by Senators Bernie Moreno (R-OH), Tim Sheehy (R-MT) and Lisa Blunt Rochester (D-DE), requires the Secretary of Commerce to support the leadership of the United States with respect to the deployment, use, application, and competitiveness of blockchain technology. The bill marks a bipartisan effort in the Senate to guide America toward the right path to becoming the world’s leading forum for DeFi developers and users. To accomplish this, the bill would require the creation of a national blockchain deployment advisory committee, composed of a diverse set of stakeholders.

DEF supports legislation that is welcoming of digital assets and decentralized financial technology, and applauds the bipartisan coalition of policymakers that has formed to secure American leadership in digital assets and blockchain technology.   

Congress Rapidly Advancing Stablecoin and Market Structure Legislation

Last week, Senate Majority Leader John Thune (R-SD) announced that the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act of 2025 will advance to the Senate floor before Memorial Day recess. The bipartisan legislation, cosponsored by Senators Bill Hagerty (R-TN), Tim Scott (R-SC), Cynthia Lummis (R-WY), Angela Alsobrooks (D-MD), and Kirsten Gillibrand (D-NY), is the Senate’s proposed stablecoin regulatory framework. Majority Leader Thune’s announcement means that the legislation will be voted on the Senate floor by the end of May. Additionally, revised text of the GENIUS Act was proposed on the Senate floor. 

This week, the House Financial Services Committee (HFSC) and House Agriculture Committee will hold a joint hearing entitled “American Innovation and the Future of Digital Assets: A Blueprint for the 21st Century.” The joint hearing, including both Committees of jurisdiction, will unveil market structure legislation for digital assets. 

DeFi Education Fund will be closely monitoring the legislation. DEF hopes to see that the legislation creates jurisdictional clarity for digital assets with spot market authority, a clear differentiation between CeFi and DeFi, and explicit protections for self-custody. Stay tuned for updates from DEF.