US Senator Cynthia Lummis has introduced a standalone bill aimed at protecting non-custodial blockchain developers from being classified as money transmitters, as the Senate prepares to unveil the long-awaited draft of her broader crypto market structure legislation ahead of a key markup this week.
The bipartisan proposal, co-sponsored by Senator Ron Wyden, revives the Blockchain Regulatory Certainty Act, clarifying that software developers, miners, validators and infrastructure providers who do not control user funds or hold private keys should not fall foul of federal money transmission rules. The bill reinforces the principle that “code is not custody,” limiting regulatory liability to entities that actually control customer assets.
The move comes amid intense last-minute negotiations over the Senate’s comprehensive Digital Asset Market Clarity Act, which is expected to be finalized and made public as early as Tuesday, with a review by the Senate Banking Committee scheduled for Thursday. While earlier versions of the Market Structure bill included similar protections for developers, that language remained a point of contention during negotiations.
“It’s time to stop treating software developers like banks just because they write code,” Lummis said, highlighting growing concern that recent enforcement actions risk criminalizing open source software development.
Industry advocates note that the standalone bill aims to demonstrate bipartisan support for protecting non-custodial developers, although uncertainty remains over whether the provision will survive within the broader market structure. The Blockchain Regulatory Certainty Act was initially developed by the House before being included in Senate discussions, and the new Senate version reflects the House’s previous language.
The latest leaked draft of the Clarity Act (page 189) includes provisions prohibiting companies from paying interest only on stable balances. Users can still earn rewards, but only by taking specific actions, such as trading, staking, providing liquidity or collateral, or participating in governance. Crypto journalist Eleanor Terrett noted that banks may have gained the upper hand in negotiations over stable coin yields. Senators have 48 hours to submit amendments, which makes it unclear whether the rules will remain unchanged during Thursday’s markup.
The Senate Banking Committee is expected to review the finalized draft on Thursday, while the Senate Agriculture Committee delayed its development until the end of the month to allow more time for bipartisan compromise. The outcome could shape US crypto regulation and the DeFi ecosystem for years to come.
