Bipartisan Senate Bill Seeks Clarity on Crypto Developer Liability Under Federal Law

Senators Cynthia Lummis (R-WY) and Ron Wyden (D-OR) have reintroduced bipartisan legislation to clarify when and how crypto developers and infrastructure providers may be treated as money transmitters under federal law.

The proposal, dubbed the Blockchain Regulatory Certainty Act, aims to clarify the distinction between developers who write or maintain blockchain software and financial intermediaries that control customer funds, a line that has come under pressure from prior enforcement actions involving privacy and self-custodial software.

“Blockchain developers who have simply written code and maintain open-source infrastructure have lived under threat of being classified as money transmitters for far too long,” Lummis said in a statement released Monday, adding that such a designation “makes no sense when they never touch, control, or have access to user funds.”

The bill would exclude so-called non-controlling developers and infrastructure providers from being treated as money transmitters under federal law, provided they do not have the legal right or unilateral ability to move users’ digital assets.

“Forcing developers who write code to follow the same rules as exchanges or brokers is technologically illiterate and a recipe for violating Americans’ privacy and free speech rights,” Wyden said.

The proposal follows a 2024 letter from Lummis on the same issue and builds on earlier congressional efforts to clarify when crypto developers are subject to regulatory obligations, including legislation reintroduced by Rep. Tom Emmer (R-I).

Control, not code

Observers speaking with Decrypt say the proposal draws a clearer boundary between writing software and controlling user funds.

“This is long overdue progress. Writers of self-custody code should never be treated as banks or exchanges since we don’t control the funds,” Mehow Pospieszalski, CEO of wallet infrastructure platform American Fortress, told Decrypt.

It comes as lawmakers continue to debate a broader market-structure bill and as scrutiny of developer liability has intensified following DOJ prosecutions tied to privacy and self-custody software, including the Tornado Cash case against Roman Storm and the sentencing of Samourai Wallet’s CTO late last year.

Developer liability is “one of those issues that can quietly derail everything else if it’s left unresolved,” Jakob Kronbichler, CEO of on-chain credit marketplace Clearpool, told Decrypt, adding that the proposal “looks like an attempt to put a clear marker down early.”

By reintroducing it now, Lummis and Wyden “are clearly trying to shape the direction of the larger debate,” he said.

Asked how the DOJ’s actions in the Samourai Wallet and Tornado Cash cases have shaped the discussion, Kronbichler said the issue has taken on greater weight for policymakers and industry observers.

“Those cases turned what was previously a theoretical concern into a concrete one. For a long time, developer liability was discussed as a ‘what if’ scenario. Now there are real prosecutions that developers and founders are watching closely,” he said. 

Such a predicament “creates urgency,” given how it “forces lawmakers to confront whether existing frameworks are being applied in ways they never intended,” he added.

What matters is no longer just about “avoiding regulation,” but now extends to “making sure accountability follows control, rather than attaching liability simply because someone wrote software,” he said