A bipartisan proposal in the US Senate is seeking to resolve long-standing uncertainty over whether writing blockchain software should be treated as operating a financial services business. Senator Cynthia Lummis has partnered with Senator Ron Wyden to introduce the Blockchain Regulatory Certainty Act, a measure designed to clearly distinguish between creating software code and managing customer funds. The proposal reflects growing concern that existing regulatory interpretations have blurred this distinction, creating unnecessary compliance burdens for technical developers.
The legislation is intended to establish that building blockchain infrastructure does not equate to providing financial services when developers do not take custody of user assets. By drawing this line more clearly, the bill aims to offer legal certainty to individuals and companies engaged in software development rather than financial intermediation.
Separating Code Development From Asset Control
Senator Lummis, who chairs the Senate Banking Subcommittee on Digital Assets, has argued publicly that constructing blockchain infrastructure without handling customer funds should not trigger regulatory oversight similar to that applied to banks or money transmitters. According to her position, oversight should depend on whether an entity has legal authority to execute transactions or move assets independently, rather than on whether it provides tools used by others.
The proposed legislation introduces specific exemptions for developers and firms working on distributed ledger technologies when they lack unilateral control over user funds. Under the bill, the determining factor is whether a developer can directly initiate or complete transactions on behalf of users. Those who merely publish or maintain software that others choose to use would fall outside the scope of financial services regulation.
Activities Covered Under the Exemptions
The bill outlines several categories of activities that would receive regulatory protection. Publishing open-source or proprietary software for decentralized networks would be exempt when it does not involve custody of assets. Operating validator nodes or maintaining network infrastructure would also qualify, provided these activities do not grant control over user funds.
In addition, companies that sell hardware wallets or develop self-custody applications would not be classified as financial service providers under the proposal. Infrastructure services that support the technical functioning of distributed ledgers, such as networking or data validation tools, would similarly remain outside the reach of money transmission rules. Together, these provisions are designed to cover a broad range of technical roles that enable blockchain networks without directly interacting with customer assets.
Addressing Innovation and Legal Risk
Senator Lummis has described the current regulatory classification of blockchain developers as illogical, pointing out that many developers have no access to user funds and therefore cannot misuse them. She has also suggested that fear of prosecution and licensing requirements has discouraged domestic innovation, even though these activities pose minimal risks related to money laundering or illicit finance. The bill seeks to remove this chilling effect by offering explicit legal protections for legitimate technical work.
Writing code is not the same as controlling money and developers who build blockchain infrastructure without touching user funds shouldn't be treated like banks. @RonWyden and I are ensuring that won’t happen. pic.twitter.com/9zIgh07e0b
— Senator Cynthia Lummis (@SenLummis) January 12, 2026
By reducing uncertainty, lawmakers hope to encourage blockchain development to remain within the United States rather than shifting to jurisdictions with clearer regulatory frameworks.
Balancing Federal and State Authority
The proposal maintains a role for state enforcement within defined boundaries. States would retain the ability to apply laws that align with federal standards, but they would be prohibited from requiring money transmission licenses for developers engaged solely in the protected activities outlined in the bill. This approach is intended to prevent a fragmented regulatory environment where differing state rules create compliance challenges for nationwide or global projects.
Regulatory ambiguity under existing frameworks has persisted for years, leaving many developers facing the prospect of navigating state-by-state licensing regimes despite never controlling user capital. This uncertainty has contributed to the migration of technical talent to regions offering clearer guidance. The Blockchain Regulatory Certainty Act aims to reverse that trend by providing a consistent national standard for blockchain software development.
