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A bipartisan group of U.S. lawmakers has introduced new legislation aimed at protecting blockchain software developers from certain criminal charges. Sponsors say the proposal would clarify how federal law applies to developers who do not control user funds. Supporters argue that recent prosecutions have created legal uncertainty for builders working on open-source tools. The measure adds to a broader debate in Congress over digital asset regulation.
In brief
- Bill limits liability to parties with custody or control of user digital assets.
- Non-custodial developers would not qualify as money transmitters under Section 1960.
- Industry groups say the measure could prevent future prosecutions of crypto developers.
- Senate lawmakers are advancing parallel efforts to clarify developer protections.
House Targets Prosecutorial Reach in Crypto Developer Cases
Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren introduced the Promoting Innovation in Blockchain Development Act on Thursday. The measure seeks to clarify how Section 1960 of federal law—which prohibits operating an unlicensed money transmitting business—applies to blockchain developers.
Under the proposal, criminal liability would attach only to individuals or entities that exercise custody or control over another person’s digital assets. Developers who simply write code or maintain blockchain infrastructure, without handling customer funds, would not meet the statutory definition of a money transmitter.
The Blockchain Association called the bill a critical safeguard for U.S.-based developers, while the DeFi Education Fund said it could help prevent prosecutions similar to those brought against creators of privacy-focused tools.
According to the DeFi Education Fund, the legislation clarifies that developers who do not take custody of user funds may build neutral, open-source software without being treated as financial intermediaries under criminal law.
Congress Considers Safe Harbor for Blockchain Code Authors
Supporters argue that establishing clearer boundaries would have practical implications across several segments of the blockchain ecosystem:
- Open-source contributors could publish and maintain code without fear of being categorized as money transmitters.
- Developers of decentralized protocols would avoid liability if they do not have custody or control over users’ assets.
- Infrastructure operators—including node runners and transaction validators—would not automatically face criminal exposure.
- Courts would gain clearer statutory standards when determining whether blockchain development activity constitutes operating a financial service.
The push for clarity follows a series of high-profile cases involving crypto developers. In August 2025, Roman Storm was found guilty of operating an unlicensed money transmitting business.
In July, Keonne Rodriguez and William Lonergan Hill pleaded guilty to similar charges and were later sentenced to five and four years in prison, respectively. Storm has yet to be sentenced and could face further proceedings on additional counts.
Whether new legislation would apply retroactively to past or ongoing cases remains an open question.
Senators Cynthia Lummis and Ron Wyden introduced the Blockchain Regulatory Certainty Act in January, seeking to affirm that writing code or maintaining decentralized networks does not, in and of itself, constitute operating an unlicensed money transmitting business.
Meanwhile, lawmakers continue reviewing broader market structure reforms. The CLARITY Act advanced through the Senate Agriculture Committee in January but has not yet received a markup in the Senate Banking Committee. It remains unclear whether final legislation will explicitly incorporate developer protections as negotiations continue across both chambers.
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James Godstime is a crypto journalist and market analyst with over three years of experience in crypto, Web3, and finance. He simplifies complex and technical ideas to engage readers. Outside of work, he enjoys football and tennis, which he follows passionately.
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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
