Sen. Lummis: “The CLARITY Act will protect DeFi”

A debate is continuing in the U.S. Senate over how broadly the proposed crypto-asset (cryptocurrency) market structure bill known as the CLARITY Act would protect decentralized finance (DeFi) developers.

On the 27th (local time), Republican Sen. Cynthia Lummis wrote on X that “it is not true that the CLARITY Act fails to adequately protect DeFi developers,” adding that “this amendment will put in place the strongest protections for DeFi and developers.”

Her remarks countered comments by crypto attorney Jake Chervinsky, who warned that Title 3 of the draft bill could impose know-your-customer (KYC) obligations on non-custodial software developers.

Lummis said the relevant provisions had been revised in recent weeks through bipartisan discussions, stressing that passing the CLARITY Act is a key prerequisite for protecting DeFi developers. The amended text has not yet been made public.

Chervinsky has argued that the current draft still leaves open the possibility of classifying DeFi developers as “money transmitters,” raising concerns that even developers of non-custodial services could be subject to the same regulations as financial institutions.

“It is a core task for the DeFi industry to ensure non-custodial software developers are not wrongly classified as money transmitters,” he said. “This is not an issue that can be compromised on, but it has not yet been fully resolved.”

Meanwhile, following progress on bipartisan agreement over stablecoin reward structures, the Senate Banking Committee is expected to take up the CLARITY Act as early as next month. The industry believes that if the bill passes, the protective provisions of the “Blockchain Regulatory Certainty Act (BRCA),” which would clarify the legal status of non-custodial developers, could begin to be applied in earnest.