Blockchain Developers Fight for Legal Shield in Landmark U.S. Crypto Bill

The U.S. Senate is advancing efforts to provide regulatory clarity for digital assets, with a revised draft of the Digital Asset Market Clarity Act—known as the CLARITY Act—now under consideration. The bill, initially passed by the House of Representatives on July 29, 2025, with bipartisan support (294–134), is currently in the Senate for debate and potential amendments. The draft aims to resolve regulatory conflicts between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), while offering legal protections to developers and non-custodial service providers.

A key provision of the CLARITY Act assigns primary regulatory responsibility for digital commodities to the CFTC, while the SEC retains authority over certain types of digital assets, such as permitted payment stablecoins as defined in the GENIUS Act. Under the proposed framework, the SEC would handle fraud, manipulation, and insider trading in the stablecoin context, while the CFTC would oversee transactions on CFTC-registered platforms. Additionally, the bill seeks to exempt specific digital assets from being classified as “investment contracts” under the Howey test, thereby reducing regulatory uncertainty for secondary market transactions.

The digital asset industry has actively lobbied for the inclusion of strong protections for blockchain developers and non-custodial service providers. In a letter dated August 27, 112 industry representatives—including major players like a16z crypto, Coinbase, Kraken, and Uniswap—called on the Senate to ensure that legislation treats blockchain infrastructure as neutral and does not impose undue regulatory burdens on developers. These advocates emphasized the need to preserve historical protections for open-source software development and prevent developers from being misclassified as “money transmitting businesses,” a designation that could lead to excessive compliance burdens and legal exposure.

The Senate’s parallel bill, the Responsible Financial Innovation Act of 2025, introduced by Senators Tim Scott, Cynthia Lummis, Bill Hagerty, and Bernie Moreno, complements the CLARITY Act by focusing on regulatory modernization and innovation. The 35-page discussion draft includes provisions to define “ancillary assets,” which are intended to clarify which digital assets are not considered securities. It also mandates that the SEC tailor its existing requirements to digital asset activity, ensuring that regulations remain relevant and do not hinder technological progress.

The CLARITY Act is seen as a critical step in positioning the U.S. as a global leader in the digital asset space. Proponents argue that by resolving jurisdictional disputes and providing clear regulatory boundaries, the legislation will foster innovation, attract investment, and enhance consumer protection. The bill’s next steps include Senate debate, potential amendments, and a final vote, after which it would move to the White House for presidential review.

Source: [1] US Congress urged to protect developers in market structure bill (https://coingeek.com/us-congress-urged-to-protect-developers-in-market-structure-bill/)