Crypto leaders urge Senate to keep BRCA developer carve-out in Clarity Act
The bill cleared Senate Banking with bipartisan support and is described as nearing a floor vote, where amendments could dilute the custody-based test.
Crypto industry founders, CEOs, and investors have sent a joint letter to Senate leadership urging them not to weaken the Clarity Act’s protections for software developers as the bill heads toward a floor vote. The push centers on preserving the Blockchain Regulatory Certainty Act provision that would keep non-custodial builders from being treated as money transmitters under federal law.
Key Takeaways
- A cross-industry coalition signed a single letter asking Senate leaders to preserve the Clarity Act’s developer protections as the bill advances.
- The Senate Banking Committee moved the Clarity Act forward with bipartisan support, and the legislation is described as nearing a full Senate floor vote.
- The BRCA language draws a custody-based boundary that would exclude open-source developers, node operators, and validators from money-transmitter status when they never control user funds.
- Treasury’s 2019 FinCEN guidance already framed software and network-tool providers as not automatically money transmitters, and the BRCA is positioned as codifying that standard.
Clarity Act Nears a Senate Floor Vote as Industry Pushes to Preserve BRCA
The Clarity Act is moving into its highest-risk legislative phase for crypto builders: the Senate floor. After advancing out of the Senate Banking Committee with bipartisan support, the bill is described as poised for a full vote, and industry leaders are now lobbying Senate leadership to keep one provision intact.
That provision is the Blockchain Regulatory Certainty Act (BRCA), which the letter frames as the practical line between regulating intermediaries and criminalizing infrastructure. The BRCA survived committee markup intact, even after an amendment was filed that would have “gutted” it. The amendment’s details are not specified in the provided material, but the episode is the tell. The market-relevant risk is not whether the Clarity Act advances, it is whether BRCA gets diluted at the floor stage after clearing committee.
BRCA’s Bright-Line Test: No Custody, No Money-Transmitter Status
BRCA’s core mechanic is simple: if a person writes open-source software, runs a node, or helps validate transactions, and never takes custody or control of anyone else’s money, that person would not be a money transmitter under federal law.
For DeFi and onchain infrastructure, that custody-based boundary matters because it narrows money-transmitter exposure for non-custodial roles that sit upstream of user activity. The argument in the letter is that many builders cannot freeze accounts or move funds because they never touch them, even if their code is later used by others. Kristin Smith captured the category error in a line aimed at lawmakers: “Treating a software developer like a bank teller makes about as much sense as calling an email app's engineer a mail carrier.”
The Case for Codifying FinCEN’s 2019 Standard
The letter’s positioning is not that BRCA rewrites anti-money-laundering expectations for custodial actors. It argues BRCA aligns statute with Treasury’s existing framing.
Treasury’s 2019 FinCEN guidance recognized that providing software or network tools used by money transmitters does not, by itself, make the provider a money transmitter. BRCA is presented as turning that guidance into a clearer, custody-based definition in law.
The same framing tries to preempt the predictable objection that developer protections weaken enforcement. The text argues BRCA does not legalize money laundering, sanctions evasion, fraud, trafficking, or terrorist financing, and that anyone who actually holds customer funds remains subject to the same AML rules as before. It also claims clarity improves targeting: “Clear boundaries do not weaken enforcement. They strengthen it by separating lawful builders from the bad actors prosecutors should be chasing.”
Floor-Vote Pressure Points for DeFi Builders and Onshore Development
The competitiveness angle is explicit. The U.S. share of the world’s open-source crypto developers is stated to have fallen from 38% in 2015 to roughly 19% in the latest annual count, though the underlying dataset is not named in the excerpt.
The letter also points to enforcement risk for non-custodial builders, citing the conviction of Tornado Cash developer Roman Storm for conspiring to operate an unlicensed money transmitting business. The excerpt does not provide dates or case details beyond the reference, so the broader claim that such cases are already pushing developers overseas is asserted more than quantified. Still, the policy implication is clear: uncertainty around whether publishing code can trigger money-transmitter exposure is a location decision for teams, with Singapore and Abu Dhabi named as alternative hubs.
Politically, BRCA is framed as bipartisan, with Sens. Cynthia Lummis and Ron Wyden cited in the Senate and House Majority Whip Tom Emmer and Rep. Ritchie Torres cited in the House. The near-term question is whether that coalition holds through floor amendments.
Why This Developer Definition Is a Tradable U.S. Regulatory Signal
I treat this as a market-structure story disguised as a policy fight. The threshold that matters is whether the custody-based BRCA definition survives the floor process without being narrowed into something that still leaves non-custodial builders exposed.
If BRCA holds, the setup starts to look structural rather than narrative-driven because it codifies a boundary that reduces legal tail risk for U.S.-based DeFi development and infrastructure operations. If it gets diluted, the Clarity Act can still advance, but the onshore build thesis weakens in the one place that actually constrains liquidity over time: where teams are willing to ship code and run critical infrastructure under U.S. jurisdiction.
