112 Crypto Firms Push US Senate for Developer and Non-Custodial Protections in Market Structure L...

112 crypto firms urge the US Senate to protect developers and non-custodial providers in digital asset legislation.

Industry warns the US risks losing blockchain talent as open-source developer share drops from 25% in 2021 to 18% in 2025.

Advocates call for federal safeguards to avoid misclassification, prevent state conflicts, and support blockchain innovation.

A coalition of 112 crypto companies, investors, and advocacy groups has urged the US Senate to add critical protections in upcoming digital asset legislation. The group sent a letter on Wednesday to the Senate Banking and Agriculture Committees. The letter demanded nationwide protections for software developers and non-custodial service providers. The signatories said developers must not be misclassified as intermediaries under outdated financial rules.

Industry Warns of Growing Risks

The coalition warned that without safeguards, the United States risks losing ground in blockchain development. The letter highlighted that the share of open-source blockchain developers in the US dropped sharply. It fell from 25% in 2021 to 18% in 2025. The decline was mainly linked to regulatory uncertainty, according to Electric Capital data cited in the letter. The group argued that the absence of legal clarity pushes innovation abroad and harms domestic leadership.

Calls for Federal Consistency

The coalition stressed that legislation must create a clear and consistent framework across all states. They said protections must prevent conflicting rules at the state level. The letter urged lawmakers to ensure no individual or entity faces regulation only for building or maintaining blockchain networks. It also stated that non-custodial service providers should not be treated as financial intermediaries. The coalition emphasized that developers who do not hold user funds should not face money transmitter classifications.

Bipartisan Momentum Builds

Crypto advocates noted strong bipartisan support for developer protections in earlier legislation. They pointed to the CLARITY Act, which passed with a broad majority in the House. That bill included measures shielding developers and non-custodial actors from misclassification. The coalition urged the Senate to expand on those safeguards. They said Congress must build on this momentum to ensure the US remains competitive. Last week, Senator Cynthia Lummis announced that a digital asset market structure bill is expected to reach President Donald Trump’s desk before the year ends. She said that the Senate Banking Committee is seeking to progress the legislation in September and the Agriculture Committee in October.

The association covered Coinbase, Kraken, Ripple, Uniswap Labs, a16z, and almost all large lobbying groups in the US on crypto matters. Their message did not change: federal law should safeguard developers and non-custodial service providers to ensure that innovation does not get out of the country.