Ahead of a critical Senate hearing on the CLARITY Act, blockchain and decentralized finance (DeFi) advocacy groups are ramping up pressure. The DeFi Education Fund, a prominent defender of open financial protocols, is sharply criticizing eight proposed amendments, warning they could severely damage DeFi technology and software development rights.

According to the Fund, these proposed changes pose significant legal and technical threats to decentralized innovation. The group is urging senators to reject proposals put forth by lawmakers such as Jack Reed, Catherine Cortez Masto, and Elizabeth Warren, which are set to be reviewed during a hearing on Thursday, January 15, 2026.

Senate Under Fire: CLARITY Act Faces Pushback from DeFi Community

The DeFi Education Fund argues that several of the amendments could:

🔹 Empower the Treasury to sanction smart contracts

🔹 Narrow the legal definition of “non-custodial developers”

🔹 Expand FinCEN’s authority over blockchain platforms

🔹 Ban transactions involving “illegal” DeFi protocols

For example, Amendment 42 could grant broad powers to prosecute smart contracts based on potential misuse. Amendment 75, introduced by Sen. Cortez Masto, could lead to a blanket ban on certain decentralized transactions.

“We must ensure that it is people, not code, that are held accountable — or we risk crushing open innovation,” said Amanda Tuminelli, Chief Legal Officer at the DeFi Education Fund.

Crypto Community Mobilizes: Scoring Senators and Fighting Back

The DeFi Education Fund partnered with the Stand with Crypto campaign to grade senators based on how they vote on DeFi-related issues. Special attention has been drawn to Sen. Warren, who submitted over 20 amendments, including one that removes exemptions for airdrops and other token distributions.

While some amendments raise red flags, the Senate Banking Committee, led by Republican Tim Scott, released a “Myths vs. Facts” document aiming to clarify misconceptions. According to the committee, the CLARITY Act:

🔹 Protects legitimate software development

🔹 Does not threaten the banking system

🔹 Establishes clear accountability for fraud and market manipulation

🔹 Seeks to prevent future collapses like FTX

The Battle Over Crypto Regulation Intensifies

While the House passed its version of the CLARITY Act in July 2025 with bipartisan support (294–134), the Senate debate is heating up.

Coinbase has threatened to withdraw support if the current version limits stablecoin rewards. Critics argue that the bill disproportionately favors established players like Coinbase and Circle while undermining smaller innovators and open-source developers.

Supporters of the legislation stress the urgency of passing a regulatory framework before the November 2026 midterm elections. If the political landscape shifts, much of the current progress could be undone.


#CLARITYAct , #defi , #Web3 , #CryptoRegulation , #Stablecoins

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