Senator Ron Wyden urges Congress to keep developer protections in CLARITY Act

Sen. Ron Wyden has urged Senate leaders to keep legal protections for non-custodial blockchain developers in the CLARITY Act as negotiations over the crypto market structure bill continue.

In a letter sent to Senate Majority Leader John Thune and Senate Democratic Leader Charles Schumer, Democratic Senator Ron Wyden urged congressional leaders to retain Section 604, known as the Blockchain Regulatory Certainty Act (BRCA), in any future version of the CLARITY Act.

The BRCA, originally introduced by Senators Cynthia Lummis and Ron Wyden earlier this year, has been folded into the CLARITY Act and would clarify that non-custodial software developers are not considered money transmitters under federal law. Wyden remains the bill’s only Democratic cosponsor.

In the letter, Wyden said the provision would allow law enforcement to focus on unlicensed money transmitters while giving software developers legal certainty. He argued that the language aligns with existing policy at the U.S. Department of Justice and the Financial Crimes Enforcement Network instead of creating new exemptions.

“The provision also includes a common-sense exception that any non-custodial developers found to be transferring or using funds originating from illicit activity are not protected,” Wyden wrote, adding that the proposal would ensure bad actors remain accountable while preventing neutral software developers from being treated as financial intermediaries.

Developer protections remain at the centre of Senate talks

Developer liability has remained one of the most disputed parts of the Senate’s market structure bill for months.

In March, Senator Cynthia Lummis dismissed concerns raised by crypto lawyer Jake Chervinsky that Title 3 of the Senate draft could still expose some non-custodial developers to money transmitter rules. Lummis said bipartisan revisions would make the legislation “the strongest protection for DeFi and developers ever enacted” and urged lawmakers to pass the CLARITY Act for those safeguards to take effect.

A month later, Lummis said she was working on additional changes to strengthen protections for non-money transmitting developers while preserving law enforcement’s ability to pursue criminal actors. She also said discussions included clarifying how assistance in illicit activity should be interpreted and whether safe harbour periods should apply to newly launched protocols.

The U.S. Department of Justice has also signalled a similar enforcement approach. Acting Attorney General Todd Blanche previously said developers with no involvement in criminal conduct would not face prosecution, with enforcement focused instead on those directly participating in illegal activity.

Industry groups have backed Section 604, arguing it would reduce legal uncertainty for open-source software developers and discourage blockchain projects from moving overseas. At the same time, some law enforcement organisations and Catholic leaders have warned the measure could weaken efforts to investigate human trafficking and other financial crimes.

Senate negotiators are also still trying to resolve disagreements over ethics rules tied to public officials with digital asset interests. Previous negotiations have linked progress on the legislation to bipartisan agreement on conflict-of-interest provisions, while separate discussions continue over stablecoin yield rules that have divided banks and crypto companies.

With Congress expected to leave Washington in August and the November elections approaching, lawmakers face a narrowing window to advance the CLARITY Act through the Senate.