Introduction
U.S. Senators Cynthia Lummis from Wyoming and Ron Wyden from Oregon have put forth a renewed bipartisan effort with their reintroduction of legislation intended to draw a clear line regarding the treatment of crypto developers and their infrastructure in relation to existing money transmission regulations. Known as the Blockchain Regulatory Certainty Act, this proposal seeks to define the difference between developers who create and maintain blockchain technologies and those intermediaries who directly handle customer transactions or manage their funds.
Legislative Intent
This distinction has been increasingly blurred due to prior enforcement actions in cases involving privacy tools and other self-custodial software, which have raised concerns among developers and their legal standing.
In a statement on Monday, Senator Lummis expressed that blockchain developers who contribute to open-source projects should not face the threat of being labeled as money transmitters, especially since they do not manage or have access to customer funds. “It is nonsensical to categorize them in the same group as financial institutions with custody over digital assets,” she emphasized.
Proposed Exemptions
The newly proposed legislation would exempt developers and infrastructure providers that lack the authority or the means to access or transfer a user’s digital assets from being classified as money transmitters under federal regulations. Senator Wyden echoed these sentiments, criticizing the notion of imposing conventional financial rules on software developers as an outdated and inappropriate approach.
“This misalignment threatens personal privacy and freedoms, which are foundational to our digital economy,” he stated.
Context and Industry Response
This legislative push builds on Lummis’s earlier correspondence from 2024 and seeks to advance prior congressional efforts led by others like Rep. Tom Emmer, who also attempted to clarify regulations regarding crypto developers. Industry observers have remarked that the proposed legislation is a necessary step that clearly differentiates software development from the management of financial assets.
Mehow Pospieszalski, the CEO of American Fortress, a wallet infrastructure firm, commented on the importance of recognizing that developers creating self-custody software should not be equated to banks or financial exchanges.
Legal Implications
The need for this clarification comes amid ongoing conversations about broader regulations within the cryptocurrency market and heightened scrutiny over the responsibilities of developers following various prosecutions related to privacy-focused software. The legal cases involving Tornado Cash and Roman Storm, alongside the recent sentencing of the CTO of Samourai Wallet, have underscored the growing emphasis on holding developers accountable.
As Jakob Kronbichler, CEO of Clearpool, pointed out, the implications of developer liability could significantly disrupt legislative progress unless addressed proactively. The urgency of the situation reflects the shift from hypothetical scenarios to real consequences, as developers now face serious legal ramifications that have heightened the need for regulatory clarity.
The discussions are no longer solely about evading regulations but about ensuring accountability aligns with actual control over assets, rather than just being penalized for the creation of software.
