US Lawmakers Move to Shield Crypto Developers: What’s Next for Blockchain Innovation?
A bipartisan group of US Representatives has introduced legislation aimed at halting the prosecution of software developers who don’t have custody or control of third-party crypto assets. Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren are sponsoring the Promoting Innovation in Blockchain Development Act, seeking to clarify how criminal cases potentially involving blockchain developers are handled.
The Core of the Bill: Narrowing Section 1960
The bill focuses on clarifying Section 1960 of US federal law, which prohibits illegal money transmission businesses. Currently, the legislation seeks to ensure this section applies only to entities with control over customer funds, not simply developers who write code. This distinction is crucial, as recent cases have applied Section 1960 to developers without custodial access, creating uncertainty within the decentralized finance (DeFi) sector.
Industry Support and Key Backers
The proposed legislation has garnered public support from crypto advocacy organizations. The Blockchain Association called it a “critical step” in fostering US-based developers, while the DeFi Education Fund (DEF) believes it could prevent prosecutions similar to those of Tornado Cash developer Roman Storm and the creators of Samourai Wallet.
The DEF stated the bill clarifies that software developers who don’t custody or control other people’s money can build technology without fear of criminal prosecution as if they were a financial intermediary.
Recent Cases Fueling the Debate
The need for this legislation stems from recent prosecutions. Roman Storm was found guilty in August 2025 of operating an unlicensed money transmitting business. Founders of Samourai Wallet, Keonne Rodriguez and Will Lonergan Hill, pleaded guilty to similar charges in July and received prison sentences of five and four years, respectively. As of February 26, 2026, Storm had not yet been sentenced and faced potential further charges.
Senate Action and Broader Legislative Landscape
The House isn’t alone in addressing this issue. Senators Cynthia Lummis and Ron Wyden introduced the Blockchain Regulatory Certainty Act in January, aiming to clarify that developers who write code or maintain networks shouldn’t be held criminally liable as unlicensed money transmitters.
The Senate is similarly considering a comprehensive digital asset market structure bill passed by the House in July 2025. The CLARITY Act was approved by the Senate Agriculture Committee in January, but its review by the Senate Banking Committee is still pending. Whether the final bill will include protections for developers remains uncertain, facing opposition from some legislators.
Did you know?
The original intent of Section 1960 was to target traditional financial intermediaries, not the decentralized protocols common in the blockchain space.
FAQ: Understanding the Implications
- What does this bill aim to achieve? This bill seeks to protect software developers from criminal liability under federal money transmission laws if they don’t have control over user funds.
- Who are the key sponsors of the bill? Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren.
- What is Section 1960? It’s a section of US federal law prohibiting illegal money transmission businesses.
- Will this bill affect ongoing cases? It’s unclear if the bill, if enacted, will end cases already in progress.
Pro Tip: Staying informed about regulatory changes is crucial for anyone involved in the blockchain and cryptocurrency space. Regularly check updates from reputable sources and consider consulting with legal professionals.
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