If America wants to lead in crypto, it must protect the people who build it

The crypto industry’s leading founders, CEOs and investors recently signed a single letter to Senate leaders with one request: do not weaken the Clarity Act's protections for software developers. These are competitors, rivals for talent, capital and market share. Yet they agree on this because they understand what is at stake. Strip the developer protections out of the bill, and the United States risks pushing the people who build this technology offshore and forfeiting its lead in the next era of finance.

Congress is closer than it has ever been to giving digital assets a real regulatory framework. The Senate Banking Committee advanced the Clarity Act with bipartisan support, and the bill is now poised to move to the Senate floor for a full vote.

But one provision is under threat. The Blockchain Regulatory Certainty Act, or BRCA, is the foundation everything else rests on. It draws a bright line: if you write open-source software, run a node, or help validate transactions, and you never take custody or control of anyone's money, you are not a money transmitter under federal law.

The rest of the Clarity Act depends on that guarantee, because there is no digital asset market to regulate if the people who build it cannot afford to build it in the U.S. The provision survived the committee markup intact, despite a filed amendment that would have gutted it, and it must stay in through the final vote, fully and without dilution.

Here is why this matters to people who will never read a word of the statute. The engineers who write this software, from core Solana contributors to the designers of new DeFi protocols, publish code that anyone in the world can download and use. They hold no money. They cannot freeze an account or move funds, because they never touch them. Treating a software developer like a bank teller makes about as much sense as calling an email app's engineer a mail carrier. Treasury's 2019 FinCEN guidance already recognized that merely providing software or network tools used by money transmitters does not, by itself, make someone a money transmitter. The BRCA aligns the criminal code with that standard.

When laws are murky, regulators and prosecutors fill the gap. Treasury has pursued builders who wrote and released software but never held a customer's assets. The conviction of Tornado Cash developer Roman Storm for conspiring to operate an unlicensed money transmitting business is the case people know, and it fits a pattern that should worry anyone who cares about American innovation. Cases like it are already pushing developers overseas.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.