Senators Push Bill To Protect Crypto Developers From Being Treated As Banks

MarketDash Editorial Team

9 hours ago

A bipartisan proposal from Senators Cynthia Lummis and Ron Wyden seeks to clarify that writing blockchain code shouldn't automatically make developers subject to the same rules as financial institutions.

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Writing Code Shouldn't Mean Breaking Banking Laws

Here's a question that's been bugging the crypto world: If you write software that enables financial transactions, does that make you a bank? Senator Cynthia Lummis (R-Wyo.) and Senator Ron Wyden (D-OR) don't think so, and they've introduced a bill to settle the matter.

The Blockchain Regulatory Certainty Act, introduced Monday, aims to carve out clear exemptions for blockchain developers from federal money transmitter requirements. The key distinction is "non-controlling" developers, which the bill defines as those who build or maintain blockchain-based ledgers but lack the legal authority to control transactions without third-party approval.

The legislation also protects activities like offering hardware or software for customer self-custody solutions and providing infrastructure support for distributed ledger services.

"This bill gives our developers the clarity they need to build the future of digital finance without fear of prosecution for activities that pose no money laundering risk," said Lummis, who chairs the Senate Banking Digital Assets Subcommittee.

"It's time to stop treating software developers like banks simply because they write code," the pro-cryptocurrency lawmaker added.

Why This Matters Now

The timing isn't coincidental. The Justice Department recently softened its stance toward developers who create decentralized platforms for transmitting cryptocurrencies without criminal intent, but not before some developers faced serious legal consequences.

Roman Storm, co-founder of cryptocurrency mixing platform Tornado Cash, was convicted last year for operating an unlicensed money transmitting business. Prosecutors argued that Storm deliberately profited from criminal use of the protocol, while the defense maintained that non-custodial software developers shouldn't be classified as financial intermediaries.

The case attracted attention from unexpected corners. Edward Snowden, the former CIA contractor turned whistleblower, publicly backed Storm, emphasizing that privacy is not a crime.

For context, a money transmitting business provides financial services involving the transfer of funds on behalf of the public. These activities fall under federal regulation through the Bank Secrecy Act, which is designed to prevent money laundering and other financial crimes.

The question at the heart of this debate is whether building the tools that enable transactions is the same as conducting those transactions yourself. Lummis and Wyden clearly think there's a difference worth protecting.

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