Leaked Draft of US Congress’ ‘DeFi Killer’ Bill Sparks Debate

Web3 startup accelerator Alliance DAO said the bill forces projects to sacrifice decentralization

article-image

US Capitol Building | Credit: Shutterstock

share

key takeaways

  • Draft shows modifications to language that drew criticism for being incompatible with DeFi
  • Sam Bankman-Fried said the bill will provide customer protection without jeopardizing DeFi

Details around Bitcoin and Ethereum regulation have been “circulating secretly” in Washington, DC. Now, a copy of draft language for the Digital Commodities Consumer Protection Act (DCCPA), a bill in the US Congress, was uploaded to GitHub by crypto attorney Gabriel Shapiro. Views on the potential impact on decentralized finance (DeFi) are mixed.

The latest draft appears to cushion language perceived to be detrimental to DeFi — a category of blockchain-based solutions that aim to improve finance by replacing central intermediaries with software code.

It lays out what constitutes digital commodities, brokers, custodians, dealers and platforms. Also included in the document are rules and the core principles that apply to players in the digital commodities sphere.

Shapiro noted that the draft excludes people who develop or publish software from the term “digital commodity trading facility” — a move he said could be beneficial to the crypto industry by protecting software engineers. 

Loading Tweet..

But he expressed doubt over the origin of this exclusion, calling for other commentators to review the draft and voice their opinions. The attorney, general counsel at Delphi Labs, said he shared the draft in the interest of “transparency and open discussion of the future of cryptolaw.”

The bipartisan bill was introduced by Sens. Debbie Stabenow (D-MI) and John Boozman (R-AR) in August. Their legislation clarifies that bitcoin and ether are to be classified as commodities, as opposed to securities that come under the ambit of the Securities and Exchange Commission — implying that the Commodity Futures Trading Commission (CFTC) would have exclusive jurisdiction over them.

After the introduction of the bill, The Washington Post reported Boozman said in a press call that the crypto industry “almost universally” prefers to be regulated by the CFTC.

Sam Bankman-Fried believes draft bill won’t kill DeFi

FTX CEO Sam Bankman-Fried has expressed support for the framework, saying he was excited to see a “strong bill” that addresses customer protection in crypto. 

On Wednesday, the crypto billionaire tweeted that he was optimistic the Stabenow-Boozman bill would not jeopardize “the existence of software, blockchains, validators, DeFi, etc.”

He also shared his thoughts in a blog on what crypto regulation should look like, specifically saying it’s important that “on-chain code and DeFi remain free and open, and uncensored.”

Even so, Bankman-Fried, chief of a centralized crypto exchange, has been criticized for supporting a bill that appears to threaten decentralized protocols.

Concerns about Congress choking decentralization

On the critical side of the debate, Web3 startup accelerator Alliance DAO disparaged the DCCPA bill, saying it forces human intermediation and compels projects to sacrifice decentralization. 

The DAO reckons the bill does not clarify what a digital commodity is, or make clear the distinction between tokens that are commodities and those that aren’t.

Loading Tweet..

Framework Ventures’ co-founder Vance Spencer also voiced opposition, saying the venture capital firm “opposes the DCCPA and the shadow cabal that is trying to make it a reality.”

“DCCPA kills DeFi and cedes market share to the centralized exchange that is pushing it,” Spencer added.

Most crypto exponents hope the draft can be amended to treat DeFi fairly.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Featured.png

Research

Helium stands at a pivotal moment in its evolution as a decentralized wireless network, balancing rapid growth, economic restructuring, and global expansion. With accelerated growth in domestic DAUs and Hotspots supporting its network, Helium is leveraging strategic partnerships and innovative proposals to scale internationally. The recent implementation of HIP 138, “Return to HNT,” has unified its token economy under HNT, simplifying participation and strengthening liquidity, while HIP 139’s phase-out of CBRS refocuses efforts on scalable Wi-Fi offload. Meanwhile, governance shifts under HIP 141 raise questions about centralization as Nova Labs consolidates control over the roadmap.

article-image

The Arbitrum-based perps DEX recently launched its points campaign

article-image

P2P Foundation founder Michel Bauwens revealed this week that Satoshi wrote him over email in the early days of Bitcoin

article-image

A Blockworks Research report looked at how Hyperliquid has maintained its hype and how it can build out its businesses

article-image

Dragonfly’s Rob Hadick discussed how the firm is approaching investments in the current market

article-image

The asset surged over the past seven days to reach its highest-ever weekly close on the SOL/ETH pair

article-image

Industry watchers note that SOL ETFs have attracted a fraction of the demand for bitcoin and ether ETFs