A years-long debate over whether developers can be held liable for activities conducted through decentralized software has resurfaced in the US Congress, as law enforcement groups push back against a CLARITY Act provision designed to protect some blockchain developers from money transmitter regulations.
CLARITY Act Reignites Debate over Crypto Developer Liability
24 June 2026 - 22:03 CEST
By Ana Pereira
The coalition, which includes the National Sheriffs' Association, National Association of Assistant US Attorneys, National District Attorneys Association and International Association of Chiefs of Police, argues the provision could create gaps in anti-money laundering enforcement and make it harder for authorities to investigate illicit activity involving digital assets.
In a letter to Acting Attorney General Todd Blanche and White House crypto adviser Patrick Witt, the groups said their concern was "not with individuals who merely write or publish software code" but with provisions in the market structure bill that could exempt some digital asset intermediaries from regulatory oversight.
Section 604
The dispute centres on Section 604 of the CLARITY Act, which incorporates the Blockchain Regulatory Certainty Act. The draft legislation outlines that developers of non-custodial software and blockchain infrastructure are not money transmitters solely because users interact with their technology.
Supporters say the provision is necessary to prevent regulators from treating software developers like financial institutions. Critics argue it could allow some participants in decentralized finance and other blockchain services to avoid oversight under anti-money laundering and regulatory requirements.
Under US law, money transmitters are financial intermediaries that move funds on behalf of customers and are generally required to register with federal authorities, implement anti-money laundering controls and obtain licences in many states.
Drawing the line
The issue has played out across regulators and courtrooms. In 2023, US authorities charged Tornado Cash developer Roman Storm with money laundering and sanctions-related offences, arguing he helped operate a service used to conceal illicit transactions. In 2024, prosecutors charged the founders of Bitcoin wallet Samourai Wallet with operating an unlicensed money transmitting business.
The Securities and Exchange Commission (SEC) during the Biden administration also targeted Uniswap Labs, alleging the company operated an unregistered securities exchange and broker, though the regulator dropped its investigation in early 2025 under the Trump administration.
Together, the cases have exposed a fundamental question that still sits in a grey area: whether developers of decentralized software are merely publishing code or operating services that should be subject to financial regulation.
"As currently drafted, Section 604 risks creating gaps in oversight and accountability that could impede those efforts," the organizations wrote.
Senate clock ticks
The CLARITY Act is awaiting consideration by the full Senate after clearing the Senate Banking Committee in a bipartisan vote in May, the latest milestone in a years-long push by lawmakers and industry participants to establish the first comprehensive US regulatory framework for digital assets.
Supporters are pushing for a Senate vote this year, but the bill faces a narrowing window for passage as Congress approaches its summer recess and lawmakers increasingly turn their focus to the 2026 midterm elections.
Earlier in June, the crypto industry launched the Defend Developers PAC to support candidates who back crypto developers and decentralized finance, arguing that creators of decentralized software should not be held responsible for how third parties use their code.
