Web 3 Journalist
Tim Hakki
Web 3 Journalist
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Crypto advocacy group Coin Center is lobbying the U.S. Senate to maintain a crucial clause in the upcoming market structure bill, according to a new blog post.
This provision protects software developers from liability if third parties misuse their open-source code for illicit activities.
The stakes are incredibly high for the industry. Removing these protections could freeze innovation by making coders legally responsible for how strangers use their tools. That is a risk few developers are willing to take.
Key Takeaways
- Liability Shield: Coin Center argues that developers who do not control assets should not be treated as money transmitters.
- Senate Standoff: The Senate Judiciary Committee is blocking the clause, citing enforcement concerns over platforms like Tornado Cash.
- Procedural Roadblock: The dispute has stalled the broader market structure bill, delaying regulatory clarity.
Why Is Coin Center Lobbying so Hard?
The Senate Banking Committee is currently deliberating a comprehensive digital asset market structure bill.
This legislation aims to define how the CFTC and SEC regulate the industry. Recently, Trump suggested a crypto market structure bill could arrive soon, ramping up the urgency.
However, a specific clause protecting non-custodial developers has hit a wall. Leaders of the Senate Judiciary Committee, including Senators Dick Durbin and Chuck Grassley, have intervened. They argue that shielding developers weakens laws against unlicensed money transmitters.
This political friction has created a significant procedural hurdle for the bill. Without a compromise, the entire legislative package risks indefinite delay.
The Battle Over Code Liability
For Coin Center, preserving this liability shield is a top priority. The advocacy group contends that punishing developers for the actions of users creates “chilling uncertainty” for open-source innovation.
The core issue revolves around control. Coin Center argues that if you merely publish code, like the developers of a decentralized exchange, you do not control user funds. Therefore, you cannot comply with Bank Secrecy Act requirements designed for custodial intermediaries.
This distinction is vital for the DeFi sector. Protocols where rely on developers building open systems without fear of prosecution.
If the Senate removes these protections, writing smart contracts could become a criminal liability in the U.S.
This debate refers back to earlier legislative attempts, such as the Blockchain Regulatory Certainty Act, which sought similar clarifications regarding non-controlling blockchain services.
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What Happens Next?
The industry is now watching the Senate Banking Committee. They must decide whether to strip the clause to appease the Judiciary Committee or fight to keep it. Stripping it might pass the bill, but it leaves developers exposed.
Looking globally, the U.S. risks falling behind jurisdictions with clearer frameworks. For instance, Germany’s central bank endorsed stablecoins under the MiCA regulation, providing the kind of legal certainty U.S. builders are desperate for.
If the Senate fails to resolve this standoff, major market structure legislation could be pushed into late 2026. Until then, American developers operate in a dangerous gray zone.
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