Summary
- Over
100 crypto firms demand protections for developers. - Coalition
opposes Senate crypto market structure bill as is. - Warning
issued to Senate Banking Committee leaders Wednesday. - Developers
seek clear rules to foster innovation and fairness.
Coinbase, a16z, Dapper Labs, Blockchain Capital, Kraken, and
the Solana Foundation were among the 114 organizations that signed the letter,
which was coordinated by the DeFi Education Fund.
“To create an environment in which innovators across America
can confidently and safely build financial infrastructure, the final version of
market structure legislation must include explicit federal protections for
blockchain infrastructure developers and non-custodial service providers,”
the
letter said.
“Legislation must shield developers from being misclassified
or prosecuted as operators of money transmitting businesses under 18 U.S.C. §
1960. To ensure legal clarity and nationwide consistency, federal legislation
must preempt conflicting state laws.”
Decrypt claims that the letter was partly spurred by worries
that Senate Democrats may soon attempt to include wording in the market
structure legislation that would make it illegal for developers to distribute
software that is used for money laundering or to circumvent sanctions.
Ranking member of the Banking Committee and prominent
opponent of cryptocurrency finance, Senator Elizabeth Warren (D-MA) voted
against the now-passed GENIUS Act stablecoin bill. She has also been vocal in
her criticism of President Trump’s and his family’s massive cryptocurrency and
token transactions.
“These protections must make explicit that no individual or
entity is subject to regulation solely for engaging in activities that are core
to creating, developing, publishing, and maintaining blockchain networks, nor
for enabling users to access such networks via software interfaces while
maintaining custody of their own funds,”
the letter said.
“Legislation should
not regulate developers differently based on the type of software they create
when they are not acting as intermediaries and don’t have control or custody of
user assets.”
In order to avoid a patchwork of disparate state rules, the
groups also implore senators to guarantee a unified national regulatory
standard.
In July, the House enacted the CLARITY Act, which outlines
the SEC and CFTC’s supervisory powers and creates a regulatory framework for
the cryptocurrency industry. A draft of a market-structure bill that is quite
different from the CLARITY Act is presently being considered by the Senate. If
the Senate approves its own version, the two versions will eventually need to
be reconciled.
“The leaders of the crypto industry are speaking with one
voice on a fundamental principle: public blockchains are neutral infrastructure
just like the internet, roads, or bridges,”
Miller Whitehouse-Levine, CEO of
signatory Solana Policy Institute, said in a statement provided to Decrypt.
“The U.S. doesn’t criminalize the engineers who build our highways when someone
uses them to commit a crime. Congress must apply that same principle to digital
infrastructure and include comprehensive protections for developers and
non-custodial service providers in any market structure legislation.”
78 Democrats voted with the Republicans to pass the CLARITY
Act, giving it a landslide victory in the House.
How might this coalition pressure alter final Senate bill
language?
Lawmakers may introduce explicit language shielding software
developers from undue liability linked to the code they create, ensuring they
are not held responsible for how users interact with digital assets.
Amendments could clarify the boundaries of regulatory
authority over blockchain developers and protocols to prevent regulatory
overreach that might stifle innovation. The bill might include tailored
compliance standards for developers distinct from those applied to exchanges or
custodians, reducing burdens on innovation-focused entities.
The coalition’s influence may prompt additional hearings or
technical discussions to refine language ensuring protections align with
industry realities.
