Senator Cynthia Lummis wrote on X: developers should not need lawyers to know if their code is legal. The CLARITY Act, she argues, is the fix.

The Digital Asset Market Clarity Act has recently cleared two major legislative hurdles, passing the House in July 2025 with a 294-134 bipartisan vote before the Senate Banking Committee advanced it 15-9 in May 2026. The bill now sits on the Senate Legislative Calendar awaiting a floor vote.

When Writing Code Became a Federal Risk

The case that brought this debate into focus is that of Roman Storm, a co-founder of Tornado Cash, an open-source privacy protocol built on Ethereum (ETH).

On August 6, 2025, following a four-week trial, a jury found Storm guilty of conspiracy to operate an unlicensed money transmitting business. The jury was deadlocked and unable to reach a verdict on the two more serious charges: conspiracy to commit money laundering and conspiracy to violate sanctions.

The charge carries a maximum sentence of five years in prison.

The conviction turned on a contested legal question that the CLARITY Act is aiming to address. Tornado Cash provides an open-source protocol that breaks the link between senders and recipients of cryptocurrency in order to enhance privacy. Once deployed, neither the platform itself nor its creators ever took custody of the assets at issue.

Storm’s defense argued that holding a developer liable for what independent users do with self-executing code sets a dangerous precedent. The case asked whether writing and deploying open-source privacy software can expose its creator to criminal liability for how others use it, and after the verdict, that question remains only partially resolved.

The Tornado Cash case was not isolated. The SEC issued a Wells Notice to Uniswap Labs in 2024, alleging the primary developer of the world’s largest decentralized exchange protocol was operating an unregistered broker-dealer.

The Commodity Futures Trading Commission (CFTC) separately pursued the Ooki DAO developers, arguing that participating in open-source governance made individual contributors personally liable for how end-users interacted with the platform.

What the CLARITY Act Changes for Developers

The CLARITY Act addresses this directly through Section 604, drawn from the Blockchain Regulatory Certainty Act (BRCA). The provision codifies a principle from FinCEN’s 2019 guidance: that developers and infrastructure providers who do not take custody or control of user funds are not money transmitters under federal law.

Writing open-source software, running a node, or validating transactions would not trigger Bank Secrecy Act obligations.

More than 60 CEOs and founders across the industry, including executives from Coinbase, Uniswap, Kraken, a16z crypto, and Paradigm, signed a letter to Senate leadership in June calling on the full Senate to pass the bill with the developer protections intact, describing Section 604 as a non-negotiable condition of their support.

Source: BeInCrypto