The debate over crypto regulation in the US has intensified as 112 companies, investors, and advocacy groups have written to lawmakers demanding explicit protections for software developers and non-custodial service providers.

In a letter sent to the Senate Banking and Agriculture Committees on Wednesday, the signatories — which include Coinbase, Kraken, Ripple, a16z, Uniswap Labs, and major lobbying groups — warned that misclassifying these participants as intermediaries could damage innovation in the $1.8 trillion digital asset market.

The push comes as Congress prepares a landmark market structure bill that will shape how the SEC and CFTC oversee cryptocurrencies, with expectations it will reach President Donald Trump’s desk before the end of the year.

The coalition said the final legislation must “provide robust, nationwide protections for software developers and non-custodial service providers.” Without these safeguards, the industry warned it could not support the bill.

The letter highlighted that current financial rules, written before blockchain technology existed, risk treating open-source developers as intermediaries, subjecting them to compliance frameworks that were never designed for their work.

Signatories included nearly every major US crypto lobbying group, from the Blockchain Association to the Chamber of Digital Commerce.

The scale of support reflects rare unity across exchanges, venture firms, and DeFi projects, all concerned that developers who build public infrastructure could face regulatory liabilities usually reserved for custodians and financial intermediaries.

The letter cited Electric Capital data showing that the US share of open-source blockchain developers dropped from 25% in 2021 to 18% in 2025, a fall attributed largely to regulatory uncertainty.

Advocates warned that without strong federal protections, this decline could accelerate, pushing innovation abroad.

They argued that a fragmented approach — with different states imposing varying rules — would risk further confusion for developers and startups.

The industry called for a clear federal framework that avoids conflicts, prevents innovation flight, and builds on bipartisan progress already made through the CLARITY Act, which earlier passed with broad backing.

Senator Cynthia Lummis, a leading voice on digital assets, said last week that the bill will reach President Trump’s desk “before the end of the year.”

She outlined a timeline that aims for the legislation to advance through the Senate Banking Committee by September and the Agriculture Committee by October, with the goal of passage before Thanksgiving.

The legislation will establish how regulatory authority is divided between the SEC and the CFTC, a critical point of contention for the crypto market.

For exchanges, custodians, and trading firms, the bill could bring clarity on which regulator has oversight, while for developers and non-custodial providers, the inclusion of explicit protections will determine whether the open-source ecosystem can thrive in the US.

The coalition’s message stressed that nationwide clarity is needed for innovators to “confidently and safely build financial infrastructure.” Without such clarity, advocates warn the US risks losing ground in the competition for blockchain talent.

The group emphasised that the global digital asset market continues to expand rapidly, and unless developers are shielded from intermediary classifications, the US could see its share of blockchain activity diminish further.

The scale of the coalition and the urgency of its message suggest that the months ahead will be crucial in shaping the trajectory of the American crypto industry.

With lawmakers pushing for a market structure bill before the year ends, the debate over how to protect developers and non-custodial providers is set to become a defining factor in the final legislation.

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