Crypto's Legal Status Quo: Guilty Until Proven a Compiler 🤷‍♀️

Senator Cynthia Lummis is using the still-pending Digital Asset Market Clarity Act to argue that writing open-source software should not expose developers to federal prosecution. "Software developers should not need an army of lawyers to know if their code is legal. The Clarity Act ends that absurdity," Lummis posted on X on June 21, 2026.

The bill, known as the CLARITY Act, has cleared two major legislative hurdles. It passed the House in July 2025 in a 294-134 bipartisan vote, and the Senate Banking Committee advanced it 15-9 in May 2026. It now sits on the Senate Legislative Calendar awaiting a floor vote. Lummis has framed the measure as protection for coders who build neutral infrastructure rather than custody user funds.

The legislative push follows the August 6, 2025 federal conviction of Roman Storm, co-founder of the Ethereum ($ETH)-based privacy protocol Tornado Cash. After a four-week trial, a jury found Storm guilty of conspiracy to operate an unlicensed money transmitting business, a charge carrying a maximum sentence of five years. The jury deadlocked on two more serious counts: conspiracy to commit money laundering and conspiracy to violate sanctions. Storm's defense argued that holding a developer liable for how independent users interact with self-executing code sets a dangerous precedent.

The CLARITY Act addresses that question in Section 604, drawn from the Blockchain Regulatory Certainty Act (BRCA). The provision codifies a 2019 Financial Crimes Enforcement Network (FinCEN) guidance, stating that developers and infrastructure providers who do not take custody or control of user funds are not money transmitters under federal law. Activities such as writing open-source software, running a node, or validating transactions would not trigger Bank Secrecy Act obligations.

Federal regulators have previously targeted other decentralized finance developers. The Securities and Exchange Commission (SEC) issued a Wells Notice to Uniswap Labs in 2024, alleging the primary developer of the largest decentralized exchange protocol was operating an unregistered broker-dealer. Separately, the Commodity Futures Trading Commission (CFTC) pursued Ooki DAO developers, arguing that participating in open-source governance made individual contributors personally liable for end-user activity.

More than 60 CEOs and founders, including executives from Coinbase, Uniswap, Kraken, a16z crypto, and Paradigm, signed a letter to Senate leaders urging passage of the legislation.