Senator Cynthia Lummis pushed back against criticism that the Digital Asset Market Clarity Act (CLARITY Act) leaves decentralized finance (DeFi) developers exposed to legal risk, saying recent edits to the bill will create the “strongest protection for DeFi and developers ever enacted.” Her remarks came in response to crypto attorney Jake Chervinsky, who has warned Title 3 of the current draft could undercut developer shields by sweeping some non-custodial software builders into money-transmitter or KYC obligations.
Chervinsky says debate over the bill’s stablecoin rewards provisions has distracted from concerns about developer protections. He highlighted that, despite the CLARITY Act incorporating the Blockchain Regulatory Certainty Act (BRCA) in section 604—which states non-controlling developers and providers of non-custodial software should not be treated as financial institutions subject to Bank Secrecy Act KYC rules—uncertainty remains. His principal worry is that Title 3’s definitions of money transmission could still leave many non-custodial DeFi developers vulnerable to liability.
“Ensuring non-custodial software developers aren’t misclassified as money transmitters is non-negotiable for DeFi,” Chervinsky said, arguing the issue is still unsettled.
Lummis replied that bipartisan work over recent weeks has produced changes to Title 3 that will secure developer protections, and she urged passage of the CLARITY Act to lock those protections in place. She also noted that the most recent draft revisions have not yet been made public.
The debate occurs against a backdrop of high-profile enforcement actions in the United States, including the August 2025 conviction of Tornado Cash co-founder Roman Storm for conspiracy to operate an unlicensed money-transmitting business—an outcome that has heightened lawmakers’ focus on legal clarity for developers.
Senators have signaled the CLARITY Act is moving closer to a Senate Banking Committee markup expected in April, following bipartisan progress on stablecoin rules. Supporters say passing the bill is necessary to ensure the BRCA’s protections for non-custodial developers become law. Readers are encouraged to consult primary sources and official texts for the latest draft language and details.