A bipartisan coalition of lawmakers has introduced a significant new bill aimed at safeguarding crypto software developers from criminal prosecution. This legislation, unveiled on Thursday, comes as discussions surrounding a comprehensive crypto market structure bill remain stagnant.
The bill, known as the Promoting Innovation in Blockchain Development Act, proposes an amendment to existing U.S. criminal law that has been utilized to convict several crypto developers in recent years. The legislation would redefine the application of the U.S. code 1960, which currently defines an illegal money transmitting business, to apply only to individuals who “exercise control over currency.”
Introduced in the House by Representatives Scott Fitzgerald (R-WI), Ben Cline (R-VA), and Zoe Lofgren (D-CA), the new bill seeks to provide explicit protections for developers who do not take custody of user funds, thereby allowing them to create decentralized technologies without fear of legal repercussions.
Last year, a developer working on Tornado Cash was convicted under this statute, sparking widespread concern about the implications for decentralized software development. The developer contended that his role as a creator of a decentralized tool should exempt him from being classified as operating an illegal money transmitting business. Following this, the Trump administration”s Department of Justice secured guilty pleas from two developers behind Samourai Wallet, who are currently serving sentences for similar charges.
The DeFi Education Fund, an advocacy group within the industry, has emphasized the importance of this new bill, stating, “This bill is critically important for engineers. It clarifies that software developers who do not take custody of or control other people”s money can build neutral technology, here at home, without worrying about being criminally prosecuted as if they are a financial intermediary.”
While the crypto market structure bill is expected to include provisions addressing U.S. code 1960, it will likely not undertake a full rewrite of the statute. Instead, the proposed language aims to ensure that “non-controlling developers” will not be viewed as engaging in illegal money transmission under the existing law.
Currently, the DeFi component of the market structure bill is still being negotiated. Lawmakers and industry representatives are working to refine the legislation after several months of delays. Despite ongoing discussions, sources indicate that the language concerning DeFi is not likely to be the primary sticking point that would derail the bill.
As the legislative clock ticks down, there are rising concerns that if significant progress is not achieved in the coming weeks, the bill may falter as Congress heads toward a recess before the November midterm elections. The ongoing debate also involves contentious issues surrounding stablecoin rewards and potential conflicts of interest related to President Trump”s various crypto ventures.
