Senators Lummis and Wyden Push Bill to Exempt Non-Custodial Blockchain Developers from Money Transmitter Laws

U.S. Senators Cynthia Lummis (R-WY) and Ron Wyden (D-OR) are advancing a bipartisan legislative initiative to clarify the regulatory status of non-custodial blockchain developers. The Blockchain Regulatory Certainty Act (BRCA) aims to exempt these developers from money transmitter laws, which have been a source of regulatory uncertainty for the industry. The bill has drawn support from crypto advocates who argue that software developers should not face the same regulatory burdens as traditional banks.

The legislation defines a "non-controlling developer or provider" as entities that develop or maintain distributed ledger technology without the power to control or execute transactions for users. This includes activities such as software development, maintenance, and infrastructure support for blockchain networks. The bill also prevents states from imposing money transmitter requirements on developers engaged in these specified protected activities.

Current federal and state regulatory frameworks have created ambiguity for developers, leading some projects to relocate outside the U.S. due to conflicting legal requirements. The BRCA aims to provide a clear federal standard that will help reduce this uncertainty.

Why Did This Happen?

The bill responds to years of regulatory confusion and enforcement actions against crypto projects. Legal experts have noted that previous regulatory approaches created a "patchwork" of requirements, complicating compliance for developers. The BRCA reflects growing bipartisan recognition of the need for digital asset market structure legislation.

The SEC is now fully under Republican control, which has led to a shift in the regulatory tone. The agency has been more accommodating toward the crypto industry since the departure of its last remaining Democratic commissioner, Caroline Crenshaw.

What Are Analysts Watching Next?

The BRCA has been introduced as a standalone bill and is currently under consideration for inclusion in broader market structure legislation. However, its final passage remains uncertain. Congressional sources note that similar bills have stalled in previous sessions, particularly in 2023–2024.

Support for the bill comes from key industry stakeholders, including the Blockchain Association and the Chamber of Digital Commerce. These groups argue that the legislation is necessary to maintain American technological leadership in the global crypto market.

The bill's introduction follows significant lobbying by the crypto industry to remove regulatory barriers. For example, the Senate Banking Committee canceled a vote to renominate Caroline Crenshaw after industry pressure. This demonstrates the influence of the crypto sector in shaping legislative and regulatory outcomes.

Legal experts have praised the BRCA for addressing critical gaps in the current regulatory framework. Dr. Sarah Chen of the Georgetown University Blockchain Legal Institute noted that the bill provides needed clarity for developers and users operating in a legal gray area.

Despite the support, the bill faces hurdles. Legislative calendars are crowded, and there are differences between House and Senate approaches. The House has its own version of market structure legislation, the CLARITY Act, and a conference committee will be needed to reconcile these differences.

The bill also intersects with other regulatory and national security issues, such as stablecoin rewards and the treatment of decentralized finance (DeFi) platforms. These topics are expected to be addressed in the broader market structure legislation.

What Are the Market Implications?

The BRCA could have a significant impact on the U.S. crypto market by reducing regulatory uncertainty for developers and service providers. This may encourage more companies to establish operations in the U.S., supporting economic growth and innovation.

The bill's potential to clarify the regulatory environment also makes it an important tool for attracting investment in the crypto sector. Without clear rules, many companies have hesitated to operate in the U.S. due to the risk of enforcement actions.

Industry observers are watching closely to see whether the BRCA will be included in the broader digital asset market structure legislation. If passed, it would represent a major shift in the regulatory approach to blockchain technology.

The broader legislative process is also being influenced by election-year politics. Proponents want to see it finalized before the 2026 midterms to avoid potential shifts in the political landscape.

What Are the Global Considerations?

The BRCA is part of a global regulatory competition in the digital asset space. The European Union's Markets in Crypto-Assets (MiCA) regulation, finalized in 2023, has set a comprehensive framework that the U.S. is now responding to.

The U.S. crypto industry faces competition from jurisdictions like Singapore and Japan, which have clearer regulatory environments. The BRCA is seen as a step toward improving the U.S. position in this global race.

International developments have also influenced the U.S. regulatory approach. The BRCA reflects a distinct American emphasis on individual rights and developer protections, differentiating it from global models.

What Challenges Remain?

The implementation of the BRCA, if passed, will require coordination across multiple federal agencies, including the SEC, CFTC, and Financial Crimes Enforcement Network (FinCEN). This interagency coordination has historically slowed the progress of digital asset legislation.

The bill's provisions on self-custody and code publication intersect with existing intellectual property laws, export controls, and national security considerations. These complexities may lead to further negotiations before the bill is finalized.

While the BRCA addresses foundational issues in digital asset regulation, it is not a comprehensive reform. It focuses on specific rights for developers and users, leaving broader market structure issues to be addressed by other legislation.

Industry representatives remain cautiously optimistic about the bill's prospects. The Blockchain Regulatory Certainty Act has already contributed to a more sophisticated conversation about digital asset regulation in the U.S.