Nikolas Sargeant
US Senator Cynthia Lummis has introduced a standalone bill aimed at protecting non-custodial blockchain developers from classification as money transmitters, as the Senate prepares to unveil draft language for its broader cryptocurrency market structure legislation ahead of a critical committee markup this week.
The bipartisan proposal, co-sponsored by Senator Ron Wyden, revives the Blockchain Regulatory Certainty Act, clarifying that software developers, miners, validators, and infrastructure providers who do not control user funds or hold private keys should not fall under federal money transmission regulations. The bill reinforces the principle that "code is not custody," limiting regulatory liability to entities that actually control customer assets.
The legislative move arrives amid intense negotiations over the Senate's comprehensive Digital Asset Market Clarity Act, expected to be finalized and made public as early as Tuesday, with a Senate Banking Committee markup scheduled for Thursday. While earlier drafts of the market structure bill included similar developer protections, that language has remained contentious during negotiations.
"It's time to stop treating software developers like banks simply because they write code," Lummis stated, emphasizing growing concern that recent enforcement actions risk criminalizing open-source software development. Industry advocates note the standalone bill demonstrates bipartisan support for protecting non-custodial developers, even as uncertainty persists over whether the provision will survive in the broader market structure package.
The Blockchain Regulatory Certainty Act originally originated in the House before incorporation into Senate discussions, with the new Senate version mirroring that earlier House language. The standalone introduction provides insurance that developer protections could advance independently if negotiations on the comprehensive bill falter.
The latest leaked draft of the Clarity Act includes provisions restricting companies from paying interest solely on stablecoin balances. Users may still earn rewards, but only by taking specific actions such as trading, staking, providing liquidity or collateral, or participating in governance. Crypto journalist Eleanor Terrett observed that banks may have gained advantage in negotiations over stablecoin yields.
Senators have 48 hours to submit amendments, leaving uncertainty whether the stablecoin yield restrictions will remain unchanged in Thursday's markup. The provisions reflect ongoing tension between traditional banking interests seeking to protect deposit bases and cryptocurrency platforms offering yield-bearing products.
The Senate Banking Committee is scheduled to review finalized draft language Thursday, while the Senate Agriculture Committee has postponed its markup until month's end to allow additional time for bipartisan compromise. The outcome could shape US cryptocurrency regulation and the decentralized finance ecosystem for years.
Bitcoin traded relatively flat near $92,000 following the developments, while broader cryptocurrency markets showed minimal immediate reaction. Analysts suggest Thursday's markup results could have lasting implications for DeFi innovation and institutional participation in US crypto markets.
