Broad Coalition of Crypto Groups Urge Senate to Protect Developers in Market Structure Bill

“To create an environment in which innovators across America can confidently and safely build financial infrastructure, the final version of market structure legislation must include explicit federal protections for blockchain infrastructure developers and non-custodial service providers,” the letter said. “Legislation must shield developers from being misclassified or prosecuted as operators of money transmitting businesses under 18 U.S.C. § 1960. To ensure legal clarity and nationwide consistency, federal legislation must preempt conflicting state laws.”

The letter was signed by 114 organizations, including Coinbase, a16z, Dapper Labs, Blockchain Capital, Kraken, and the Solana Foundation, and was organized by the DeFi Education Fund.

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According to Decrypt, the letter was prompted in part by concerns that Senate Democrats might soon try to insert language into the market structure legislation criminalizing developers who publish software used in money laundering or to evade sanctions. Sen. Elizabeth Warren (D-MA), the ranking member of the Banking Committee, has been a leading critic of crypto finance and opposed the since-passed GENIUS Act stablecoin bill. She has also been outspoken in criticizing President Trump and his family’s extensive dealings in crypto currencies and tokens.

“These protections must make explicit that no individual or entity is subject to regulation solely for engaging in activities that are core to creating, developing, publishing, and maintaining blockchain networks, nor for enabling users to access such networks via software interfaces while maintaining custody of their own funds,” the letter said. “Legislation should not regulate developers differently based on the type of software they create when they are not acting as intermediaries and don’t have control or custody of user assets.”

Related: SEC Crypto Task Force Seeks Input on Future of Digital Asset Regulation

The groups also urge senators to ensure a single national regulatory standard to preempt a patchwork of separate state laws.

“The leaders of the crypto industry are speaking with one voice on a fundamental principle: public blockchains are neutral infrastructure just like the internet, roads, or bridges,” Miller Whitehouse-Levine, CEO of signatory Solana Policy Institute, said in a statement provided to Decrypt. “The U.S. doesn’t criminalize the engineers who build our highways when someone uses them to commit a crime. Congress must apply that same principle to digital infrastructure and include comprehensive protections for developers and non-custodial service providers in any market structure legislation.”

The House passed the CLARITY Act in July to establish a regulatory framework for the crypto market, including delineating the oversight authorities of the SEC and the CFTC. The Senate is currently considering its own draft of a market-structure bill similar to the CLARITY Act but with some differences. The two versions would ultimately need to be reconciled if the Senate passes its own version.

The CLARITY Act passed the House by a wide margin, with 78 Democrats voting with the Republicans for passage. Any version of a market structure bill is likely to have a tougher time passing the Senate, where the rules give the minority party much more leverage than in the House.