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Jai Pratap
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U.S. Senator Cynthia Lummis introduced a standalone bill aimed at protecting non-custodial blockchain developers from being classified as money transmitters, as the Senate prepares to unveil the long-awaited draft of its broader crypto market structure legislation ahead of a key 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 rules. The bill reinforces the principle that “code is not custody,” limiting regulatory liability to entities that actually control customer assets.
Standalone Bill Highlights Developer Protections
The move comes amid intense last-minute 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 a point of contention during negotiations.
“It’s time to stop treating software developers like banks simply because they write code,” Lummis said, emphasizing growing concern that recent enforcement actions risk criminalizing open-source software development.
Industry advocates note that the standalone bill is intended to demonstrate bipartisan support for protecting non-custodial developers, even as uncertainty remains over whether the provision will survive in the broader market structure package. The Blockchain Regulatory Certainty Act initially originated in the House before being incorporated into Senate discussions, and the new Senate version mirrors that earlier House language.
Stablecoin Yield Restrictions May Favor Banks
The latest leaked draft of the Clarity Act (page 189) 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 noted that banks may have gained the upper hand in negotiations on stablecoin yields. Senators have 48 hours to submit amendments, leaving it unclear whether the rules will remain unchanged in Thursday’s markup.
The Senate Banking Committee is set to review the finalized draft Thursday, while the Senate Agriculture Committee has delayed its markup to the end of the month to allow more time for bipartisan compromise. The outcome could shape U.S. crypto regulation and the DeFi ecosystem for years to come.
Bitcoin traded flat near $92,000 following the developments, while broader crypto markets showed little immediate reaction. Analysts say the outcome of Thursday’s markup could have lasting implications for DeFi innovation and institutional participation in U.S. crypto markets.
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