Key Insights
- The Blockchain Regulatory Certainty Act excludes money transmitter regulations for non-custodial developers.
- Bill explains the differences between writing code, maintaining networks, and handling user funds.
- The Senate is debating whether the protective measures put in place by the developers have been upheld.
Blockchain Regulatory Certainty Act Moves Forward as Senate Debates Limits on Developer Liability.
The Blockchain Regulatory Certainty Act has been reintroduced in the U.S. Senate, with lawmakers attempting to define the regulatory limits for blockchain developers and blockchain infrastructure providers.
The proposed legislation is in a standalone form, seeking to exempt developers and service providers who do not directly handle or control user funds from federal and state money transmitter regulations.
The Blockchain Regulatory Certainty Act would provide that the creation of software, validation of transactions, or maintaining decentralized networks does not, by itself, constitute money transmission obligations.
Additionally, legislators supporting the bill indicate that the framework is intended to establish a clear distinction between custodial intermediaries and non-controlling members in blockchain systems.
The act is a continuation of legal and policy controversies that have raised doubts about whether current financial regulations are sufficiently responsive to the technical difficulties of decentralized software development.
Legislative Scope of the Blockchain Regulatory Certainty Act
The Blockchain Regulatory Certainty Act would exclude non-custodial developers and infrastructure providers from being classified as money transmitters under federal law, provided they do not have the legal right or unilateral ability to move users’ digital assets.
The language is designed to cover developers who publish or maintain open-source code, as well as entities that support network operations without taking custody of funds.
In an X post released on Monday, Lummis stated that developers who write code and maintain open-source infrastructure have long operated under uncertainty regarding potential classification as a money transmitter.
She added that such treatment is inconsistent when developers never touch, control, or access user funds.
Wyden echoed that position, stating that applying exchange- or broker-level compliance rules to software developers reflects a misunderstanding of how decentralized technologies function.
https://twitter.com/SenLummis/status/2010818468778492132
The proposal builds on earlier congressional efforts to define the regulatory perimeter for crypto development.
Lummis previously raised the issue in a 2024 letter, while similar language has appeared in legislation reintroduced by Tom Emmer.
Moreover, supporters say the standalone bill is intended to preserve these provisions as broader market structure debates continue.
Legal and Liability of the Developer
The issues of developer liability have become more acute due to criminal incidents related to privacy-based blockchain solutions.
Last year, Tornado Cash co-founders Roman Storm and Alexey Pertsev were found guilty of operating an unlicensed money-transmitting business in connection with the mixing protocol.
Advocates of the Blockchain Regulatory Certainty Act claim that the bill would offer regulatory clarity by defining a money transmitter as an entity that actually controls assets, rather than one that merely authorizes or maintains software or the network.
The measure does not alter existing requirements for exchanges, brokers, or custodial services that directly handle customer funds.
Relationship to Broader Market Structure Legislation
The same provisions, as found in the Blockchain Regulatory Certainty Act, are now proposed in a larger crypto market structure bill that will be marked up before the Senate Banking Committee on Thursday.
Moreover, lawmakers have noted that draft language can be amended, narrowed, or removed during the markup process before any final vote.
The Senate Agriculture Committee, which must also review the market structure package, has postponed its hearing until the final week of January, according to a statement from Chairman John Boozman.
The delay creates a sense of uncertainty about whether the protections put in place by the developers will be upheld after the legislative process moves forward.
The Blockchain Regulatory Certainty Act has received the vocal support of several industry groups. According to the DeFi Education Fund, the bill would give protection to developers of non-custodial and decentralized technologies.
Meanwhile, Alexander Grieve of Paradigm described the proposal as important for domestic blockchain development.
Hassett also posed questions about whether such scrutiny would weaken the independence of the Federal Reserve or destabilize markets. He dismissed such concerns, saying that projects costing between $10 billion and $20 billion should be reviewed by the federal government.
He further noted that investigators are attempting to determine the reason the project was so expensive and where the money went.
