DEF Warns ‘Anti‑DeFi’ Amendments To CLARITY Act Could Threaten Users, Developer Protections

A DeFi advocacy group has warned about a list of proposed amendments to the long-awaited crypto market structure bill that threaten the sector’s developers and hinder innovation in the US.

CLARITY Act Amendments Could Harm The  DeFi Sector

On Wednesday, the DeFi Education Fund (DEF) shared a list of 16 “anti-DeFi amendments” to the Senate Banking Committee’s crypto market structure bill, known as the CLARITY Act, ahead of its highly anticipated Thursday markup session.

In an X post, the advocacy group warned that some of the recent amendments submitted for consideration could harm DeFi technology, users, and developers if they are implemented in the final text of the legislation.

These amendments came from Democratic Senators Catherine Cortez Masto, Andy Kim, Chris Van Hollen, Elizabeth Warren, and Jack Reed, who collectively targeted core DeFi protections in the bill.

Some of the most notable “anti-DeFi” proposals include amendments by Senators Cortez Masto and Reed targeting the Blockchain Regulatory Certainty Act (BRCA), which exempts non-controlling developers and providers from federal money transfer requirements.

According to DEF’s assessment of the text, Cortez Masto’s amendments “re-write the BRCA to turn it from a shield to a sword against developers,” and “strike protections for non-controlling developers” in Sections 301 and 302.

Meanwhile, Reed’s amendments reportedly include a “direct attack on Van Loon – 5th Circuit federal court decision by subjecting smart contracts to sanctions ‘without regard to whether such contracts operate autonomously, can be modified, or are owned.’” In addition, he proposed eliminating the BRCS from the CLARITY Act.

Other related amendments also target DeFi front ends, tokenization provisions, and expand BSA/AML obligations for developers and digital asset businesses.

DEF Urges Community Action

The DeFi Advocacy group called for action against the potential changes, urging X users to contact Senators’ offices to oppose them. However, it noted that Thursday’s markup will not consider every amendment. This gives the community a timely opportunity to press Senators to dismiss the proposals that would affect the industry.

Responding to DEF’s post, Tornado Cash co-founder Roman Semenov also slammed the Senators for targeting the DeFi sector, affirming that they “are trying to push last-minute amendments into Clarity Act that would defeat its entire purpose” and urging community members to act.

Moreover, Justin Slaughter, VP of Regulatory Affairs at Paradigm, highlighted DEF’s “anti-DeFi” list, affirming that they are “basically the key amendments to watch,” alongside those affecting stablecoin rewards, the use of digital assets for tax payments, the Securities and Exchange Commission’s (SEC) crypto guidelines and rules, and DeFi ability to operate.

It’s worth noting that Senators submitted over 100 amendments to the CLARITY Act’s text ahead of the markup vote, with roughly 40 of them coming from anti-crypto Senator Elizabeth Warren.

As journalist Eleanor Terret reported on X, one of these proposals would prevent the Federal Reserve from issuing master accounts to crypto firms, resulting in heavy criticism from the crypto community and White House Crypto Advisor Patrick Witt.