Hi. Kyle here.

Being a builder or developer in crypto’s decentralised finance corner could be likened to walking a legal tightrope in the fog. 

But a new bill in Congress is looking to add a bit more “clarity.”

A freshly revised version of the 247-page Clarity Act includes new language that could offer long-sought legal protection for crypto developers, wallet makers, and infrastructure providers.

The bill is sponsored by House Republicans, including French Hill, Dusty Johnson, and Majority Whip Tom Emmer.

Its latest amendment, known as an Amendment in the Nature of a Substitute, adds a key provision.

The clause specifies that “non-controlling” developers, encompassing those who write or publish code, provide non-custodial wallets, or maintain blockchain infrastructure, “shall not be treated as a money transmitter” solely on that basis.

That distinction may soon be written into law for the first time and would be a major boon for DeFi builders.

In recent years, developers behind projects like Tornado Cash and Samourai Wallet have faced criminal charges for allegedly operating unlicensed money transmitting businesses, despite not holding customer funds. 

Those cases have drawn criticism from the crypto industry and digital rights advocates, who argue that publishing code or facilitating user self-custody should not be treated the same as moving money on behalf of others.

Still, the safe harbour applies only to these so-called “non-controlling” actors. Its exact definition will likely be debated as the bill moves forward. 

Protocols with admin keys or insider influence may not qualify. 

And while the amendment narrows the scope of who must register as a money transmitter, it doesn’t address the broader range of enforcement tools still available to agencies like the US Securities and Exchange Commission or the US Department of Justice.

Other major parts of the bill would exempt a wide range of decentralised finance activities from Commodity Futures Trading Commission oversight, so long as they don’t involve fraud or manipulation. 

Node operators, oracle providers, liquidity pool participants, and wallet developers would not be required to register under commodities law simply for offering infrastructure or tools. 

Separately, a new “blockchain control person” definition aims to restrict token sales by insiders who retain unilateral authority over a protocol, especially for projects deemed “mature” under the bill’s decentralisation test.

The House Financial Services Committee is set to hold a markup on the bill on Tuesday, where lawmakers will debate and vote on the proposed amendments.

ICYMI

• Why DeFi ‘purity test’ is centre stage in new crypto mega-bill
  Crypto idealists have long envisioned finance without middlemen. They have also desired a more democratic internet where applications are owned by users, rather than a small cadre of executives and investors. In short: decentralisation.

• XRP treasury buying jumps as Chinese firm lays out $300m in unusual deal

  Move over Bitcoin. XRP is becoming increasingly attractive to companies stockpiling crypto. Last Tuesday, Webus International, a Chinese firm listed on the Nasdaq, said it plans to build a $300 million XRP treasury, according to a filing with US regulators.

Story of the Week

Uniswap’s DAO drama sparks debate on decentralisation in Congress
Once limited to social media, obscure internet forums, and niche publications, DAO drama has made it to Washington.

During a hearing last Wednesday regarding a major crypto bill making its way through Congress, Representative Sean Casten brought up a recent squabble about governance at Uniswap DAO.

Post of the Week

In his latest provocative column for DL News, Wolfgang Münchau argued that President Donald Trump’s “big beautiful bill’ will widen the US federal deficit and set the stage for a form of default. This development would have serious implications for Bitcoin and stablecoins. How so? Read on…

DL News is an independent news organisation that provides original, in-depth reporting on the largely misunderstood world of cryptocurrency and decentralised finance. From original stories to investigations, our journalism is accurate, honest and responsible.

Forwarded by a friend? subscribe here.