US Senators Propose Legislation to Exempt Blockchain Developers from Money Transmitter Regulations

According to Cointelegraph, U.S. Senators Cynthia Lummis and Ron Wyden have introduced the Blockchain Regulatory Certainty Act (BRCA) to exempt blockchain developers and service providers who do not directly handle user funds from money transmitter regulations. The legislation, introduced on Monday, seeks to clarify that activities such as writing software or maintaining networks should not trigger federal or state money-transfer requirements. This move addresses growing concerns among crypto developers about potential criminal liability for how their software is used. Last year, Tornado Cash co-founders Roman Storm and Alexey Pertsev were found guilty of operating an unlicensed money-transmitting business related to a mixing protocol. Senator Lummis emphasized that the bill aims to provide developers with the necessary clarity to innovate in digital finance without fear of prosecution for activities that do not pose money laundering risks. She noted that the current regulatory uncertainty has driven innovation offshore and subjected developers to conflicting state regulations. Lummis stated that blockchain developers who write code and maintain open-source infrastructure have been unfairly classified as money transmitters, which limits innovation. She argued that this designation is inappropriate as these developers do not touch, control, or access user funds, and it is time to stop treating them as banks merely for writing code. The crypto market structure bill, which includes similar protections, is set for a markup with the Senate Banking Committee on Thursday. However, provisions in a draft bill are not guaranteed and may be amended, diluted, or removed during the markup process before it is voted into law. The Senate Agriculture Committee, another panel that needs to approve the market structure effort, has postponed its hearing until the last week of January, as stated by Chairman John Boozman. The BRCA has received approval from several groups within the crypto industry. The DeFi Education Fund, a crypto lobby group, expressed support in a social media post, stating that the bill provides essential protections for developers of non-custodial, decentralized technologies. They urged Congressional leaders to prioritize clarity and protections for software developers. The Blockchain Association, a non-profit crypto advocacy organization, highlighted the importance of clear rules for innovation in the U.S. and stressed that the BRCA should remain part of market structure legislation. Alexander Grieve, vice president of government affairs for investment firm Paradigm, described the BRCA as crucial legislation to support U.S. blockchain development.