When a young engineer ships a new wallet plug-in, they are not opening accounts or touching client funds. Yet in America today, that line can blur in a courtroom. Publish code that helps people hold their own assets and you may be accused of running an unlicensed money-transmission business.
This anxiety explains a rare show of unity in late August, when 112 companies, foundations and advocacy groups delivered a blunt message to the US Senate’s Banking and Agriculture committees.
“Provide robust, nationwide protections for software developers and non-custodial service providers in market structure legislation. Without such protections, we cannot support a market structure bill,” the coalition wrote on August 27.
The letter is part diagnosis, part ultimatum, and argues that open-source builders and those who ship non-custodial interfaces should not be regulated like financial intermediaries if they do not hold or control customer funds.
Lawmakers, the group says, should “treat blockchain technology as neutral infrastructure” and make the guardrails pre-emptive at the federal level to avoid a patchwork of 50 state interpretations.
The crux of the ask
At the heart of the plea are three specific protections.
First, Congress should make explicit that core software activities such as creating, publishing and maintaining code, or providing a front-end that leaves users in control of their assets, are not themselves regulated financial services. The coalition wants language that “must shield developers from being misclassified or prosecuted as operators of money transmitting businesses under 18 U.S.C. § 1960,” a statute that has been used in crypto cases where custody and control are contested.
Second, the protections should apply nationwide. Pre-emption matters because states often define “money transmission” broadly, creating uneven risk for non-custodial tools that look like payments plumbing but never actually hold money. The letter warns that, without clarity, “the bill risks stifling innovation, undermining open-source development, and driving blockchain infrastructure development out of the United States.”
Third, the senators are urged to lift and improve on work already moving through Congress. The coalition applauds the inclusion of two measures in House and Senate drafts: the Blockchain Regulatory Certainty Act, which creates a safe harbour for “non-controlling” developers and infrastructure providers, and the Keep Your Coins Act, which protects the right to self-custody.
How we got here
In July 2025, the House passed the CLARITY Act with bipartisan support, 294–134, sending the package to the Senate Banking Committee. Observers saw its developer language as a foundation, but not the final word.
Days later, on July 21, Senate Banking leaders released a discussion draft of a digital-asset market-structure bill. The 240-plus page draft sketches out SEC and CFTC boundaries, disclosure updates and a full title on illicit-finance controls. It also invites feedback on developer treatment and non-custodial tooling, which is precisely the gap the industry wants closed.
Around the edges sit the building blocks the coalition name-checks. The Blockchain Regulatory Certainty Act proposes a federal safe harbour for certain “non-controlling” developers and service providers. And the Keep Your Coins Act has been introduced in both chambers to prevent agencies from restricting the use of self-hosted wallets.
The stakes for payments
Wallets, key-management SDKs, node services and self-serve interfaces are increasingly the rails for peer-to-peer transfers, merchant settlement and tokenised cash instruments. If developers of these tools risk being treated as money transmitters when they do not touch funds, product cycles slow, compliance costs jump, and investors hesitate.
The coalition ties this directly to US competitiveness, citing a shrinkage in America’s share of open-source developers from 25% in 2021 to 18% in 2025, and quoting a recent federal report that reversing the decline is “central to the goal of making America the crypto capital of the world.”
Yet the Senate’s draft signals the other side of the ledger: more rigorous controls on illicit finance, examination standards and partnerships to close gaps between new rails and old rules. Payment firms which straddle card networks and tokenised settlement will recognise the trade-off.
Clarity for non-custodial builders can sit alongside tougher expectations on entities that do custody, match orders, or intermediate flows
What the letter actually says
A few lines matter most:
- “Treat blockchain technology as neutral infrastructure and include comprehensive protections for the developers building it and the non-custodial service providers enabling users to access it.”
- “No individual or entity is subject to regulation solely for engaging in activities that are core to creating, developing, publishing, and maintaining blockchain networks.”
- “Legislation must shield developers from being misclassified or prosecuted as operators of money transmitting businesses under 18 U.S.C. §1960.”
The signatories span policy shops and blue-chip players, from Coinbase, Kraken, Ripple and Paxos to Uniswap, Solana Foundation and a16z crypto, coordinated by the DeFi Education Fund.
Ramifications if the Senate bites
If senators adopt the coalition’s developer protections, the effects would ripple across builders, payments firms and compliance teams.
Give builders a clear safe harbour and they move faster. Legal risk falls when they publish code and run non-custodial interfaces, so they stop geoblocking US users and push more open-source work from American teams.
With clearer lines, payments firms deploy wallets and peer-to-peer tools without constant licensing surprises. At the same time, custodial businesses, broker-dealers and exchanges face tighter scrutiny under the Senate framework. That mix speeds innovation at the edge while keeping firm controls at the core.
For compliance teams, federal pre-emption replaces a 50-state maze with one national standard for non-custodial products, cutting the cost of navigating money-transmitter rules. The flip side is straightforward: firms that hold assets or intermediate trades should prepare for deeper examinations and more explicit accountability.
