Trouble after trouble for the Clarity bill... U.S. Senate Judiciary: “No immunity for coin developers”

Senior lawmakers from both parties leading the U.S. Senate Judiciary Committee have moved to block the “developer protection provision,” one of the key flashpoints in legislation to set the market structure for digital assets (cryptocurrencies). The concern is that the provision could weaken penalties for criminal conduct such as money laundering. Analysts say that the bill’s review—already postponed indefinitely—has hit another major hurdle.

According to Politico and other foreign media on the 16th (local time), Senate Judiciary Committee Chairman Chuck Grassley, a Republican, and Ranking Member Dick Durbin, a Democrat, recently sent a letter to the Senate Banking Committee strongly urging the deletion of “Section 604” in the bill.

Section 604 at issue incorporates the text of the “Blockchain Regulatory Certainty Act (BRCA).” Its core is to shield developers who created software from criminal liability even if third parties abuse that software to commit illegal acts. The decentralized finance (DeFi) industry has argued the provision is essential for its survival.

However, the two lawmakers wrote in the letter that “this provision would severely weaken federal laws against unlicensed money transmitting businesses.” Citing the case of Roman Storm, a developer of the mixing service Tornado Cash who was charged by the U.S. Department of Justice (DOJ), they stressed that “it has been demonstrated how important current law is to punishing those involved in illicit money laundering.” They also voiced displeasure, saying, “Although jurisdiction over criminal law (Title 18) rests with the Judiciary Committee, the Banking Committee did not engage in meaningful consultation with us in advance.”