On Monday, U.S. Senators Cynthia Lummis and Ron Wyden introduced the Blockchain Regulatory Certainty Act. This bipartisan effort aims to exempt non-custodial blockchain developers and infrastructure providers from federal money transmitter regulations.
This law aims to encourage innovation in blockchain and follow federal guidelines. In addition, it seeks to make sure that non-custodial developers are not treated like banks or financial institutions under regulations.
Furthermore, the proposed bill states that developers who make software, manage distributed ledgers, or offer essential infrastructure without controlling users’ funds will not be considered money transmitters according to federal law.
Senator Lummis, the chair of the Senate Banking Digital Assets Subcommittee, highlighted that developers who simply write code and manage open-source systems have been subjected to unfair regulatory pressures. She said that calling them money transmitters doesn’t make sense because they don’t manage user funds, and this label hinders innovation.
Senator Wyden pointed out the constitutional issues with the current regulations. He argued that treating developers the same way as exchanges or brokers is not only a poor fit for technology but also violates Americans’ privacy and free speech rights. The law aims to create a clearer set of rules by matching federal standards with state laws. This will help boost the U.S. digital finance sector.
Currently, many blockchain developers are facing unclear rules. As a result, some move their innovations to other countries and create different regulations in various states. Recent legal actions against developers, like the prosecutions of Tornado Cash and Samourai Wallet, have caused worries in the crypto community.
In these situations, prosecutors argued successfully that managing and overseeing code could categorize developers as financial institutions, making them subject to the Bank Secrecy Act.