Senator Defends CLARITY Act As Developer Protection Debate Heats Up

A crypto developer was convicted last year for running an unlicensed money-transmitting business. That case — and others like it — is now driving one of the sharpest disagreements in Washington over how the US plans to regulate decentralized finance. The Conviction That Changed The Conversation Roman Storm , co-founder of the cryptocurrency mixing platform Tornado Cash, was found guilty in August 2025 of conspiracy charges tied to the operation of an unlicensed money-transmitting service. His conviction sent a chill through the developer community. It also made the legal definitions buried inside pending crypto legislation feel a lot more urgent. That backdrop is now shaping a public dispute between Senator Cynthia Lummis and prominent crypto attorney Jake Chervinsky over whether the Digital Asset Market Clarity Act — widely known as the CLARITY Act — actually protects the developers it claims to defend. Don’t believe the FUD– we have worked on a bipartisan basis for the last few weeks to make changes to Title 3 that make this bill the strongest protection for DeFi and developers ever enacted. We have to pass the Clarity Act to get these protections. https://t.co/CMQNHuvvFv — Senator Cynthia Lummis (@SenLummis) March 27, 2026 CLARITY Act: What Chervinsky Gets At Chervinsky’s concern is specific. Title 3 of the current Senate Banking Committee draft, he argues, contains money transmitter language broad enough to pull non-custodial software developers into Bank Secrecy Act territory — meaning KYC obligations and the regulatory exposure that comes with them. His position: that result would effectively hollow out the Blockchain Regulatory Certainty Act, which was written precisely to keep non-custodial builders out of that category. But the draft also has provisions in Title 3 that undermine the BRCA and subject all sorts of non-custodial software developers to KYC obligations anyway. Those sections must be fixed or the bill doesn’t work for DeFi. If the bill doesn’t work for DeFi, it doesn’t work at all. — Jake Chervinsky (@jchervinsky) March 26, 2026 “The biggest challenge is ensuring non-custodial software developers aren’t misclassified as money transmitters,” Chervinsky said. He called the issue non-negotiable for DeFi, and said it remains unsettled. The tension he’s flagging isn’t small. Section 604 of the CLARITY Act does incorporate the BRCA, which states that developers who don’t hold or control user funds should not be treated as financial institutions. But Chervinsky’s read is that other language in Title 3 creates enough ambiguity to undo that protection in practice. On Friday, Lummis fired back directly. She said recent bipartisan revisions to Title 3 make the bill the strongest protection for DeFi developers ever put into law. “Don’t believe the FUD,” she posted on X, urging supporters to back the legislation’s passage. Text Still Not Public While earlier drafts of the CLARITY Act have been made public, the latest negotiated revisions referenced by Cynthia Lummis have not yet been fully released. That means the specific changes she is describing cannot be independently verified — at least for now. What is known: the bill is gaining momentum. Bipartisan progress on stablecoin rewards provisions has pushed it closer to a Senate Banking Committee markup, expected sometime in April. Chervinsky has noted that those stablecoin provisions have consumed most of the public attention, leaving the developer protection debate in the background despite its significance. For developers watching closely, the stakes could not be more concrete. The question of whether writing non-custodial software qualifies someone as a money transmitter is not theoretical. Roman Storm found that out in court. Until the revised CLARITY Act text is available for review, the industry’s only assurance is a senator’s word on social media. Featured image from Pexels, chart from TradingView